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U.S. stock trading and settlement rules

1. Trading Rules

U.S. stocks are T+0 transactions, and stocks bought (shorted) on the same day can be sold (buyback) on the same day.

After buying (short selling), investors find that they have made a mistake in judgment and can sell (buyback) in time to avoid risks and losses.

 

2. Settlement rules

Effective September 5, 2017, the standard settlement period for securities traded on U.S. and Canadian exchanges will be reduced from 3 business days (T+3) to 2 business days (T+2). 

 

3. Limit on US stock price volatility

Unlike A-shares, there is no limit on the ups and downs of U.S. and Hong Kong stocks in a single trading day. Investors need to control their risk.

 

4. Why the sell order price of U.S. stocks is lower than the best ask price, but can not be traded

 

(1) Quote Delay

Under the U.S. stock market trading system, most of the transactions are conducted through specialized dealers and market makers. They are only required to notify the public within 90 seconds after each deal is made. In this case, the information we see is delayed on all real-time market systems.

 

(2) The definition oflot

In the U.S. stock market, the unit for buying/selling shares is one. However, in order to reduce the transaction cost and lower the risk for stock holding, dealers and stockholders will trade in unit of 100. In this understanding the unspecified one lotis 100 shares. If the investors place orders not in multiples of 100, they may need to wait a while.

 

5. Extended Trading Introduction

Extended trading is trading conducted by electronic networks either before or after the regular trading hours of the listing exchange. Such trading tends to be limited in volume compared to regular trading hours when the exchange is open.

 

Pre-market trading in the United States, in terms of stocks, usually runs between 4:00 a.m. and 9:30 a.m. Eastern Time, and after-hours trading typically runs from 4:00 p.m. to 8:00 p.m. Eastern Time.

 

(1) Extended Trading Risks

The U.S. Securities and Exchange Commission(SEC) highlights several risks associated with extended trading, including:

 

(2) Limited Liquidity

Extended hours have less trading volume than regular hours, which could make it difficult to execute trades. Some stocks may not trade at all during extended hours.

 

(3) Large Spreads

Less trading volume often translates to wider bid-ask spreads, which can adversely affect the market price for execution, making it harder to execute orders at favorable prices.

 

(4) Increased Volatility

Less trading volume often creates an environment for greater volatility given the wider bid-ask spreads. Prices can move drastically in a short amount of time.

 

(5) Uncertain Prices

The price of a stock trading outside of regular hours may not closely match the price during regular hours.

 

(6) Professional Competition

Any extended trading participants are large institutional investors, such as mutual funds, that have access to more resources.

 

 

协议及声明

U.S. stock trading and settlement rules

 

Except for public holidays and the market closure due to bad weather, the Hong Kong stock market generally trades from Monday to Friday. The trading hours are as follows:
 

1. Pre-open Period

Time period

Trading Rules

Enter order 9:00-9:15

Submit, modify, and cancel auction market orders and auction limit orders

Non-cancellable 9:15-9:20

Only at-auction market orders and at-auction limit orders can be submitted, and orders cannot be withdrawn or modified

Random match period 9:20-9:22 (match will start randomly at 9:20-9:22 at the final reference equilibrium price)

Conduct matchmaking during auction period

Pause period, from random match period ends to 9:30

At-auction order: Incomplete order will be cancelled by the system; At-auction limit order: If the input price range of an incomplete order does not deviate from the nominal price by nine times or more, it will be converted to a limit order and automatically transferred to the continuous trading session

 

2. Continuous Trading Hours

Time period

Beijing Time

Morning market

9:30-12:00

Closed at noon

12:00-13:00

Afternoon market

13:00-16:00

Note: Order modification is not allowed during the closed at noon, and cancellation is allowed during 12:30 - 13:00.

 

3. Closing Auction Trading Session

Time period

Trading Rules

Closing auction period 16:00-16:01      

Calculate and publish reference price; orders cannot be submitted

Enter order 16:01-16:06

You can submit, modify, and cancel at-auction market orders and auction limit orders. The price limit of auction limit orders shall not exceed ±5% of the reference price

Non-cancellable 16:06-16:08

At-auction market orders and at-auction limit orders can be submitted, and cannot be cancelled or changed; the input price of at-auction limit orders must be between the lowest selling price and the highest bidding price

Random closing 16:08-16:10

At random closing time, at-auction market orders and at-auction limit orders can still be submitted, and cannot be cancelled or changed; the input price of auction limit orders must be between the lowest selling price and the highest bidding price