1. AMS/3 Media Workshop (I). Introduction (II). System Overview (III)
AMS/3 Media Workshop (I) Introduction (II) System Overview (III) Functions & Capacity (IV) Preparation for Rollout (V) Contingency Arrangements (VI) FAQ (VII) Questions & Answers
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2. (I) Introduction
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3. Introduction
AMS/3 provides a reliable trading system for investors, Exchange Participants and market participants.
AMS/3 provides a trading infrastructure which connects investors, Exchange Participants and the central markets through eCommerce facilities.
AMS/3 can bring benefits and business opportunities to the Hong Kong securities market.
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4. Benefits
After its full implementation, AMS/3 will bring the following benefits to investors, Exchange Participants and the market.
To Investors
Enable investors to have access to the central market through additional channels via Exchange Participants
Place trading requests anywhere and anytime via Internet and mobile phone
Allow efficient access to trading request processing status
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5. Benefits To Exchange Participants
Increase Exchange Participants’ order throughput per trading right
Allow improvement of operational efficiency
reduce manual work to handle investors’ trading requests, answering enquiries about order status
better order management for traders
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6. Benefits A market accessible by global investors
To Hong Kong
A market accessible by global investors
contribute to the globalisation of Hong Kong securities market
strengthen Hong Kong’s position as a major international financial centre
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7. Benefits
To Hong Kong
Improve the Hong Kong securities market’s competitiveness
higher market accessibility and trading efficiency will help attract more market participation
provide market infrastructure of higher trading capacity
allow multiple-market trading platform and flexible trading hours
set the path for the future implementation of straight- through processing
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8. (II) System Overview
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9. Broker Supplied System
AMS/3 Overview
AMS/3 Trading System consists of five major components - Host, Trading Terminal, Multi- Workstation System (MWS), Open Gateway (OG) and Order Routing System (ORS).
Broker Trading Facilities
Investor
Access Channels
Terminal Approach
AMS/3 Trading Host
Frame
Relay Trading
Network
Order Routing
System
PNS
Gateway Approach
Trading Terminals
(On-floor)
Internet
Open
Gateway
(OG)
Open
Gateway
(OG)
Multi-
workstation
System
(MWS)
Mobile
Phone
Internet
Broker Supplied System
(BSS)
Trading Terminals
(Off-floor)
Terminal
OG/MWS
OG/BSS
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10. System Overview
Trading Terminals - AMS/3 trading terminals are similar to the existing on-floor and off-floor terminals in terms of operation but they offer new functionalities
Open Gateway (OG) - an electronic linkage between Exchange Participants and the Trading Host, which enables Exchange Participants to capture electronic trading requests from investors via Broker Supplied Systems and Order Routing System. One trading right is entitled to one OG
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11. System Overview
Multi-Workstation System (MWS) - a new Exchange Participants’ trading front end with expanded functionality. A maximum of eight terminals can be connected to a MWS server. One trading right is entitled to one MWS server
Broker Supplied Systems (BSS) - trading systems developed by Exchange Participants themselves or by commercial vendors to capture electronic trading requests
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12. System Overview
Order Routing System (ORS) - enables investors to place trading requests and enquire about trading results through the Internet and other eChannels. The trading requests will be automatically routed to Exchange Participants for approval and submission to the market for matching and trade generation
Proprietary Network System (PNS) - an alternative investor access channel developed by service providers that collects trading requests from third party networks
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13. Existing Trading Process
New Trading Process
Existing Trading Process
Investor
Order Capture
Order Input
Order Approval
Broker Office
AMS/3 Trading Host
PNS Channels
Electronic Order Capture,
Order Distribution, Order Approval
Brokers’
Proprietary
Channels
AMS/3 Channels
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14. (III) Functions & Capacity
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15. Comparison of AMS/3 and AMS/2 Functionalities
Multiple Market
Single Market
Market Model
- Automatching
- Single price auction
- Allow for other new trading methods
Automatching
Trading Method
Order types
Limit Order
- Limit order
- Enhanced limit order
- At auction order
- Others
Trading Request
By phone/in person
- By phone/in person
- Over the Internet or by
mobile phone
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16. Comparison of AMS/3 and AMS/2 Functionalities
Order Modification and Order Status Enquiry
- Done by Exchange Participants
- Investors can initiate
through Internet or mobile phone
Done by Exchange Participants
- Done by Exchange Participants
- Sent to investors automatically by , pager or mobile phone
Order Confirmation
Done by Exchange Participants
Straight-through Processing
Trading platform established to set the path for the future implementation of straight-through processing
N/A
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17. New Functionalities Market Model Multiple Market Models
supports concurrent and continuous trading in multiple markets
each market having its own products, timetable, trading method and trading rules
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18. New Functionalities Trading Methods Automatching
New trading methods to be introduced according to market needs
Single Price Auction (mainly to support high volume order input during market pre-opening or first day of an IPO)
Order input
Auction matching
Others
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19. New Functionalities New Order Types Enhanced Limit Order
allows matching in up to 2 price queues, where the price of the trade generated is at or better than the limit price
unfilled orders after matching will be converted to limit orders at the input limit price)
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20. New Order Type
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21. New Functionalities
New Order Types to be introduced according to market needs
At-Auction Order
a market order which can be input during the auction period. It will enjoy a higher auction matching priority
unfilled at-auction orders will be cancelled after auction matching
Others
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22. Comparison of AMS/3 and AMS/2 System Capacity
Component
AMS/2 Capacity
AMS/3 Capacity
(1) Host
Handle 200 transactions per second (2.88 million transactions per day based on 4 hours of trading)
Handle 75 transactions per second
(2) Network - Host End
(3) Network - Broker End
Total data transmission throughput 1,600Kbps
9.6Kbps per trading right
Total data transmission throughput 18,000Kbps
12Kbps per trading right
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23. Comparison of AMS/3 and AMS/2 System Capacity
Component
AMS/3 Capacity
N/A
2.5 seconds per order per terminal (Exchange Participants may have second and third terminals)
AMS/2 Capacity
(4) Open Gateway (OG)
Hardware capacity: 12 transactions per second
(5) Multi-Workstation System* (MWS)
Max. 12 transactions per second and 6 transactions per second if risk management function is on
(6) Order Throughput in addition to first terminal
1 second per order
(7) Order Routing
System (ORS)
40 transactions per second
* 8 workstations can be connected to a MWS server.
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24. Throttle Rate
Throttle rate is the number of orders that can be submitted to the Host System from OG within a specific period of time.
Rationales of adopting throttle control :
As a flood control mechanism which is common to systems of this type, to ensure fair and orderly operation of the market
To ensure OG-Host traffic flow will not exceed the planned capacity of AMS/3
As a reference of SEHK to plan, measure and manage trading capacity and upgrade activities
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25. Throttle Rate
The throttle rate under AMS/3 is defined as 1 second per order per trading right. The order throughput of AMS/2 is 2.5 seconds per terminal. Some Exchange Participants may have installed two off-floor trading terminals (second and third terminals) per trading right.
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26. Scalability Paths AMS/3 Host
AMS/3 Host system is designed to be scalable, meaning that the system capacity could be expanded by adding hardware like CPU, memory, disc, etc and the software reconfiguration of AMS/3.
AMS/3 Network
If market needs warrant, AMS/3 Network expansion involves addition of network hardware and reconfiguration of routers and Internet Protocol addresses for the entire network.
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27. Scalability Paths
ORS
ORS is designed to be scalable to support future transaction growth. Its capacity can be further expanded by adding ORS server and security hardwares.
OG & MWS
OG vertical scalability is currently limited by the security hardware (for message encryption / decryption) of 12 orders per second. Upgrade direction will either be installing new encryption devices or, if technically feasible, to adopt software encryption mechanism.
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28. System Security
In order to structurally handle system security, AMS/3 has been organised into three different zones each having its specific challenges and security measures.
AMS/3 Host Security Zone
Host
1st Terminal at Trading Floor
Internet
New Frame-
Relay Trading
Network
ORS/PNS
2nd Terminal at Member Offices
Mobile Phone OG OG
ORS Security Zone
MWS
BSS
Member System Security Zone
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29. System Security
Various tools are employed to ensure the security of AMS/3’s various components. These include:
Firewall
Anti-virus System
Smart Card
Public Key Infrastructure (e-certificate)
Intrusion Detective System
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30. (IV) Preparation for Rollout
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31. Production Readiness Test AMS/3 Day-0 Rehearsal Programme
Before AMS/3 market rehearsals, various testing activities have been performed to ensure readiness at individual component, system and operational levels. These items were covered as follows :
Functional Test
Volume Stress Test
Fail-over and Recovery Test
Security and Operation Control Test
User Acceptance Test
Production Readiness Test
AMS/3 Day-0 Rehearsal Programme
Production Environment Shakedown
Production Fallback (e.g. Fallback to Backup Site )
Connectivity Test
Network Operations Setup
Market Contingency Plan Rehearsal (e.g. Fallback to AMS/2)
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32. Production Readiness Test
Production readiness tests had been conducted in the past 10 consecutive weeks.
10 pilot MWS brokers, 41 pilot BSS brokers, selected terminal brokers and all information vendors participated.
Themes of the tests include: production environment shakedown, production fallback, connectivity, network operations setup, fallback to AMS/2, and volume stress, etc.
Technical issues encountered during the fallback test from primary site to backup site. The issues had been resolved.
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33. Preparation for Rollout
A series of broker activities were held to familiarise brokers with AMS/3
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34. Preparation for Rollout
The Exchange’s various initiatives to get the market prepared for AMS/3 rollout:
Raising public/market awareness
market consultation before system development
AMS/3 web corner
press release and presentation to news media
AMS/3 newsletter
other investor education initiatives
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35. Preparation for Rollout
Support for Exchange Participants
seminars
product brochures
site visits
terminal training /computer based training
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36. Preparation for Rollout
Support for Information Vendors to facilitate their connectivity to AMS/3
Support for BSS Suppliers
release technical specifications to support their in-house system development
briefing sessions, including technical briefings after production readiness tests to share experience for ensuring that their systems are capable for handling high throughput
Help desk to handle telephone and enquiries
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37. Market Rehearsals
Four consecutive weeks from 2 September - 23 September
Aim to familiarise all Exchange Participants (including 10 pilot MWS and 41 pilot BSS) with new trading environment
New functionalities
Operation of Trading Terminals, MWS and OG
Volume stress (3 times of historical peak)
AMS/3-to-AMS/2 fallback
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38. Details of the Market Rehearsal (MR) Scenarios and Calendar are as follows:
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39. Market Rehearsals General
AMS/3 terminal operation rehearsal following completion of terminal training for 1,800 traders
Compulsory participation and reporting of rehearsal status by Exchange Participants
Real-life trading procedure
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40. Market Rehearsals General
Briefings will be provided to all Exchange Participants on Market Rehearsal arrangements
Rehearsal programme will be closely monitored and reviewed by the Exchange and the SFC, and Exchange Participants are requested to participate in compliance with stated requirements and guidelines
Rehearsal programme consists of Normal Trading, Volume Stress, Fallback to AMS/3 backup site, and Fallback to AMS/2
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41. Market Rehearsals Normal Trading Rehearsal
Repeated rehearsals for each session for all on-floor and off-floor terminal users
Script-free
To ensure a “real-life” practice, Exchange Participants have to observe a set of guidelines (For example: order quantity NOT greater than 10 board lots, and order price should be within +/- 32 spreads against opening price). The guidelines are not related to system capacity.
Exchange Participants are requested to follow the guidelines or else will be suspended from the rehearsal
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42. Market Rehearsals Normal Trading Rehearsal
Include normal administrative activities (For example: new listings, suspension of trading for individual stocks, and trading and issuers’ news announcements)
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43. Market Rehearsals Volume Stress Rehearsal
To create a “real-life” testing environment, two runs of two 45 minutes sessions of volume stress test at 3 times historical peak for ~ 350,000 orders and 250,000 trades per each 45 minutes session
Exchange Participants are required to key in 3 orders per minute using off-floor terminals, and on-floor terminals will be reserved for computer-assisted generation of traffic to meet the target stress
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44. Market Rehearsals Fallback Rehearsal
AMS/3 primary site to AMS/3 backup site (normal contingency fallback)
AMS/3 to AMS/2 ("3 to 2" fall back, special contingency fallback for the first two weeks after Day 0)
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45. Day 0 (First day of AMS/3 implementation)
The Exchange will determine if other readiness activities will be required after four weeks of market rehearsals
Day 0 is subject to satisfactory conclusion of Market Rehearsals which involve all Exchange Participants
AMS/3 will operate in terminal mode on Day 0. Other functions and open accessibility will be activated thereafter in phases
The Exchange will inform the market of the Day 0 when its assessment shows the market is ready
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46. AMS/3 Rollout Schedule Day 0 DAY 0 DAY 0 + 3 weeks DAY 0 + 2 month
3rd Batch Rollout
Pilot Rollout
10 sets of MWS terminals
Pilot BSS Rollout
1st Batch Rollout
50 MWS, ~30 BSS
2nd Batch Rollout
50 MWS, ~40 BSS
10 MWS
50 MWS
50 MWS
xx MWS
Terminals
30~40 BSS
30 BSS
40 BSS
xx BSS
Day 0
Day weeks
Month 1
Month 2
Month 3
………
DAY 0
DAY weeks
DAY month
DAY month
Terminal Delivery
MWS Multi- Terminal Mode Delivery plus OG Delivery
Activate BSS plus OG Delivery
Online trading provided by the BSS
Rollout depending on market needs
Auction Trading
New Order Types - Enhanced Limit Order
Rollout depending on market needs
ORS Internet Delivery
ORS Mobile Delivery
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47. (V) Contingency Arrangements
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48. Contingency Arrangements After Day 0
Adopting a prudent approach, the Exchange has developed a complete set of contingency arrangements to cater for emergency system situation.
AMS/3-to-AMS/3 Fallback (Normal Contingency)
from AMS/3 primary site to AMS/3 backup site to prepare for AMS/3 hardware failure
AMS/3-to-AMS/2 Fallback (Special Contingency)
AMS/2 will be in standby mode during the first 2 weeks after the AMS/3 Day 0. Trading will be reverted to AMS/2 in case of emergency
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49. Contingency Arrangements After Day 0
3-to-3 Fallback (similar to 2-to-2 Fallback)
Fallback will be required if there are environmental failures, such as fire and major hardware failure at the AMS/3 primary site
Trading and stock data at the backup site are synchronised with the primary site
Fallback will normally take 1 to 1.5 hours, and reasonable time will be allowed to inform the market
The last nominal prices will be used as initial nominal price when trading resumes
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50. Contingency Arrangements After Day 0
3-to-2 Fallback
Scenario 1 (AMS/3 fails before or during the morning session)
trading will resume in AMS/2 in the afternoon session
the previous day closing prices of securities will become the initial nominal prices at the restart of AMS/2 in the afternoon session
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51. Contingency Arrangements After Day 0
3-to-2 Fallback
Scenario 1 (AMS/3 fails before or during the morning session)
the previous closing prices of the component stocks will be used for initial Hang Seng Index (HSI) calculation
if these prices are used, the HSI calculation may not reflect the “true” value during the initial trading period. It is until all component stocks have concluded trades in AMS/2, the HSI calculation will return to normal.
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52. Contingency Arrangements After Day 0
3-to-2 Fallback
Scenario 2 (AMS/3 fails in the afternoon session)
trading will resume in AMS/2 on the next trading day
the last nominal prices of securities will become the initial nominal prices when trading resumes on the next trading day. If the last nominal prices cannot be retrieved , initial nominal prices will be set to be “N/A”
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53. Contingency Arrangements After Day 0
3-to-2 Fallback
Scenario 2 (AMS/3 fails in the afternoon session)
all the indices, HSI, AOI and GEI will be calculated as usual on the next day. Provided that the last nominal prices for all securities before AMS/3 failure can be retrieved and used as the initial nominal prices
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54. Contingency Arrangements After Day 0
3-to-2 Fallback
In both scenarios, the opening quotation rule will be relaxed (order input will not be limited by the +/- 4 spreads restriction)
The exact time/day of resumption of AMS/3 will depend on the severity of failure and will be announced in advance.
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55. Broker Supplied System
AMS/3 Rollout Strategy
Broker Trading Facilities
Investor
Access Channels
Terminal Approach
AMS/3 Trading Host
Frame
Relay Trading
Network
Order Routing
System
PNS
Gateway Approach
Trading Terminals
(On-floor)
Internet
Open
Gateway
(OG)
Open
Gateway
(OG)
Multi-
workstation
System
(MWS)
Mobile
Phone
Internet
Broker Supplied System
(BSS)
Trading Terminals
(Off-floor)
Terminal
OG/MWS
OG/BSS
Day months
Day 0
Day weeks
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56. (VI) FAQ
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57. FAQ When will online trading be possible?
AMS/3 allows investors to trade online via BSS and ORS. The first batch of BSS ready for rollout will be launched on Day weeks. ORS which enables investors to place trading requests and enquire about trading status through the Internet and other eChannels is planned to be launched on Day months.
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58. FAQ
Will the new trading system be insured? Will the Exchange pay compensation to investors or market participants who suffer losses due to AMS/3 system glitches?
Due diligence will be exercised to ensure the normal functioning and operation of the AMS/3 system. According to the Exchanges and Clearing Houses (Merger) Ordinance, the Exchange will not incur liability in respect of anything done or omitted to be done in good faith. The Exchange has developed a set of contingency arrangements, namely AMS/3-to-AMS/3 Fallback and AMS/3-to-AMS/2 Fallback, to cater for emergency system situations.
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59. FAQ
What kind of online services will investors enjoy after the launch of ORS?
In addition to inputting trading requests, investors can cancel and modify their requests by themselves via Internet. ORS also enables investors to have electronic access to real time stock prices and other securities information.
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60. FAQ
Does the use of ORS imply direct submission of investor's trading request to the market?
No. ORS is only a channel for broker firms to collect trading requests from investors. Investors' trading requests must be passed to a broker. The broker will then review and approve the request and submit it to the market.
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61. FAQ Is the implementation of AMS/3 behind schedule?
The listing document of HKEx stated that AMS/3 will be launched before the end of the year. It is expected that AMS/3 will be launched in phases following satisfactory conclusion of Market Rehearsals.
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62. FAQ
Some investors complained about the inefficiency (e.g. congestion of Internet) of “online trading” service providing by certain Exchange Participants. Will investors encounter the same problem after the launch of AMS/3?
After the implementation of BSS and ORS, investors’ trading requests will be routed to the central market electronically via Exchange Participants. In normal cases, online trading will provide faster services to investors. However, there may have the possibility of congestion of Internet line in which the Exchange cannot control.
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63. FAQ
Is it possible for an investor to enter ORS trading request after trading hours? Would a broker receive that trading request in their OG/MWS or OG/BSS?
Technically, ORS supports entering of trading requests after market close. But the actual ORS operating hours would depend on business needs.
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64. FAQ
How can the Exchange prevent investors from inputting wrong trading requests accidentally after the launch of ORS?
Same as the existing trading arrangements, the Exchange cannot prevent human errors done by investors from happening. The Exchange will strengthen its investor education programme by organising a series of public seminars and producing investor education materials for the investing public. As trading requests will have to go through Exchange Participants before routing to the central market, Exchange Participants will continue to perform their advisory and risk management functions after the launch of AMS/3
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65. FAQ
Will Exchange Participants be allowed to install trading terminals at addresses other than their registered business addresses?
For operational needs and security purposes, the technical installation of trading facilities under AMS/3 should not be restricted to the brokers' registered business addresses. It should be noted that however Exchange Participants are still bound by the requirement under Rule of the Exchange (Rule 352A) that any business of dealing in securities must be carried out at an address registered with the Exchange.
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66. FAQ Is there any advantage in using MWS over AMS/3 Terminals?
Both MWS and AMS/3 Terminals support AMS/3 enhanced features, such as access to multi-markets and new order types. However, MWS provides certain trader support functionalities, like order routing and risk monitoring, which are not available in AMS/3 Terminals. When ORS is launched, MWS supports online support with its electronic linkage with ORS.
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67. (VII) Questions & Answers
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