THE operator of Hong Kong’s stock exchange will introduce new controls to rein in volatility, in a long-awaited announcement that comes as mainland shares see wild price swings.

    Hong Kong Exchanges & Clearing (HKEx) said Friday that it will proceed with a proposal, unveiled in January, to introduce a closing auction and other volatility curbs that would bring it in line with international peers in New York and Europe.

    HKEx said it will give the market a year to prepare for a phased implementation of the new controls, with the roll-out beginning from mid-2016.

    The exchange had held off on reintroducing a recalibrated closing auction for several years amid opposition from influential local retail brokers who claimed the mechanism could give rise to market manipulation.

    On Friday, however, HKEx finally bowed to overwhelming pressure from international investors who say the measures are critical to Hong Kong’s status as an international financial center.

    HKEx has come under intense scrutiny in recent weeks following a series of jaw-dropping moves that saw stocks such as Hanergy Thin Film Power Group and Goldin Financial Holdings lose up to 50 percent of their value in less than two hours.

    Mainland shares listed in Hong Kong had surged earlier this year along with a sizzling speculative rally in mainland markets, which more than doubled over the last year. But mainland shares have plummeted some 30 percent in recent weeks, pulling down Hong Kong’s China Enterprises Index by more than 10 percent.

    All major stock exchanges use an auction at the end of the trading day to reduce volatility when calculating closing prices. Buy and sell orders are pooled during a five or 10-minute period and are then matched at the best available price.

    In Hong Kong, the closing price is based on continuous trading, whereby orders are matched immediately. (SD-Agencies)