Hong Kong brokers go live with proprietary AMS/3 systems

But eight of the 41 brokers from the pilot group that have spent months testing and retesting their systems, are still not confident enough to join this first batch.

Henry Law, spokesperson for the exchange, says that these eight brokers, and possibly some more that weren’t in the initial pilot group, will be rolling out their systems in a second batch four to six weeks from now.

BSS are trading facilities developed by exchange participants’ in-house teams or by third-party vendors that enable participants to provide electronic trading services to investors through the internet, mobile phones, and other electronic channels.

Of the 33 that will begin operating tomorrow, Law says about half have informed SEHK that they would accept investors' orders through the Internet, mobile phones, or other electronic channels connecting to BSS, at the date of launch. Of these some have begun advertising the benefits of trading through their newly connected systems, while others have said they might provide fully electronic securities trading services at a later date.

Under the old AMS/2 system,  any incoming order – whether via telephone, internet or WAP – had to be re-keyed manually by a broker into a terminal. This will continue to be the case with the AMS/3 system unless a broker has a BSS with internet functionality, or until the stock exchange’s own online trading service – the Order Routing System (ORS) – is launched early next year. The ORS is designed to allow smaller brokers that might not have had the money to invest in a BSS to offer online channels to their customers.

Using BSS systems to accept orders, brokers can either check and submit trades manually, or set a criteria for automatic approval and direct submission of orders to market. This results in much quicker and more reliable execution.

Last month the stock exchange launched the first phase of its AMS/3 implementation when all on-floor and off-floor trading terminals were converted to AMS/3 trading terminals on 23 October. The terminals, however, don’t offer any of the advanced features that AMS/3 offers, such as multiple market access and new order types. These won’t be available until more brokers have effectively implemented their BSS or the Multi-Workstation System (MWS) provided, at a price, by the exchange.

The HKSE has required all BSS brokers to develop contingency plans in the event of BSS failure and says that exchange participants are responsible for informing their clients of trading arrangements if their system fails.

Here is a list of brokers implementing their BSS from 10 November: