HKEX rolls out pre-trade risk management system for derivatives, includes “kill switch”

Hong Kong Exchanges and Clearing Limited (HKEX) today announced the successful launch of its Pre-Trade Risk Management (PTRM) system, a system that offers tools to help market participants in its derivatives market meet their needs for pre-trade controls while complementing their in-house risk controls.

The PTRM system strengthens HKEX’s clearing house protection, enhances the competitiveness of Hong Kong’s financial markets and can facilitate new connectivity for additional mutual market access.

The PTRM system helps Participants in HKEX’s derivatives market prevent the unintended build-up of excessive positions by giving them the ability to set limits to manage their risk exposure in real-time.  

All orders submitted to the derivatives market will be checked against the limits and any breaches will trigger order rejections.  The system also offers a “kill switch” that enables participants to withdraw all their orders at once and prevent further trading in emergency situations.

“The PTRM system is an important addition to the market infrastructure at HKEX and part of the company’s efforts to promote and support the stability of Hong Kong’s financial markets,” Roger Lee, HKEX’s Head of Markets, said.

The new risk management system was introduced in the market on April 11th, 2016 and the two-week stabilisation period ended after the close of the regular trading session on April 22nd, 2016.

To view the official release click here.

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