Hong Kong Exchange plans system to curb volatility from high-frequency trading

Charles Li, chief of Hong Kong Exchanges and Clearing, said the territory’s bourse could introduce a mechanism to prevent individual stocks from changing in value by more than 10% within a five-minute span as soon as 2016, South China Morning Post reported. Such volatility control mechanisms are meant to protect investors from sharp drop-offs in prices caused by algorithm-based high-frequency trading. According to a January proposal for the plan, if a trader sends an execution trade order at a price that is 10% up or down from a stock price, the order will be rejected and a five-minute cooling period will begin.