11. Potential impacts of Closing Auction Session (CAS) and Volatility Control Mechanism (VCM) on warrants and CBBCs trading

Are warrants or CBBCs eligible for trading during CAS?
  • No, warrants and CBBCs are not eligible for trading in CAS and their trading closes at 4 pm.
  • However, some eligible underlying assets are eligible for trading in CAS, with their closing price or level ascertained after 4:10 pm (or 12:10 pm for half day trading). Hence, it is possible that the market closing time for a warrant or CBBC may be different from its underlying asset. In this case, even the underlying asset's price or level may fluctuate during CAS, investors cannot trade related structured products. Besides, if the underlying asset's market closing price or level hits the call price or level at the end of CAS, the relevant CBBC can be knocked out and MCE will occur.
Can warrants or CBBCs be traded during the 5-minute cooling-off period after the triggering of the VCM?
  • Since during the 5-minute cooling-off period after the triggering of the VCM, the affected underlying security or index continues to trade within a specified price limit, the warrants and CBBCs can still be traded without any price limit.
  • However, if the events surrounding VCM causes abnormal trading behavior of the underlying asset lead to hedging difficulties, the issuer's liquidity provision obligations could be exempted. In this case, during the 5-minute cooling-off period, there may be a temporary absence of price quotes, a reduction in quote size, or a wider bid-ask spread.

*Turnover of a warrant or CBBC has no direct relationship with the product's price. Investors should not use turnover as the only indicator when choosing a warrant or CBBC.