Source: Securities Times.
On June 27th, HKEX announced that it will launch weekly Hang Seng Tech Index options on September 2nd. The plan is still pending approval from regulatory institutions. Weekly Hang Seng Tech Index options are short-term risk management tools with contracts that expire every week.
According to reports,$HKEX (00388.HK)$It will provide a 50% trading fee discount for this product, and the first six months of Hong Kong Securities and Futures Commission fees will also be waived upon launch. Hong Kong Exchanges and Clearing Limited (HKEX) noted that the launch of weekly HSTECH Index options, as well as the planned introduction of weekly stock options later this year, will further enrich HKEX's derivative product suite and provide the market with more short-term option choices.
Since the launch of Hang Seng Tech Index futures contracts in 2020, the Hang Seng Tech Index derivatives product portfolio of the Hong Kong Stock Exchange has become one of the most active product categories in trading. The average daily trading volume of futures contracts increased from about 14,000 contracts in 2021 to over 116,000 contracts now. The Hang Seng Tech Index options also set a new record for daily trading volume with 315,770 contracts traded on May 3 this year.
The average daily trading volume of the Hong Kong Stock Exchange's derivative product market in 2023 was 1.35 million contracts, an increase of 4% from the previous year. The upward trend continues in 2024, with the average daily trading volume exceeding 1.56 million contracts as of May this year, an increase of 13% from the same period last year.
In fact, the Hong Kong derivative market is well developed and product-rich. In the case of weak trading in the stock market in recent years, the Hong Kong derivative market has performed well.
Hong Kong's derivative market has maintained positive growth in trading volume for four consecutive years, with an annual growth rate of 6.6%, and a trading volume of 331 million contracts and holding positions of 11.84 million contracts, both hitting historical highs, according to the Hong Kong Exchanges and Clearing Limited's 2023 statistics. Over the past 10 years, the average annual growth rates of trading volume and holding positions in the Hong Kong derivatives market were 15.5% and 9%, respectively, making it the most stable business unit for Hong Kong Exchanges and Clearing Limited's business growth in recent years.
In 2012, with the successful acquisition of the London Metal Exchange by HKEX and the acceleration of the RMB's internationalization process, the types of HKEX's derivative products rapidly expanded to various non-Hong Kong dollar-priced international products, especially a series of offshore RMB exchange rate futures, which gradually became popular RMB exchange rate risk management tools. Since 2021, HKEX has successively launched MSCI Asia and Emerging Markets series index futures and options, MSCI China A50 interconnection futures, and other products, further enhancing the international appeal of derivatives.
HKEX's monthly derivative data report shows that the total trading volume of MSCI China A50 interconnection (USD) index futures from January to May this year was 1.833 million contracts, a significant increase of 83.3% year-on-year.
Ming Xiaochong, Chairman of the Association of Chinese Futures Industry in Hong Kong, said that in addition to boosting market liquidity and attracting more enterprises to finance through IPO in Hong Kong and more investors to participate in financing and securities trading activities in Hong Kong, we should also see the development potential of Hong Kong's derivatives market.
Data shows that the steady development of Hong Kong's derivatives market over the past decade and the rapid development of RMB futures over the past six months have both demonstrated the enormous potential of Hong Kong's derivatives market. Especially in the current turbulent external environment, expanding the derivatives market in Hong Kong can fulfill the risk management and investment needs of enterprises and investment institutions, and rapidly enhance Hong Kong's international pricing power and voice in derivatives markets.
Ming Xiaochong said that Hong Kong can be more proactive in launching financial futures and options. First, change the approval system for products to a filing system to shorten the product listing cycle; second, in addition to actively developing new derivative products, it can also batch list mainstream active varieties of major derivative trading venues in the world. Derivatives that do not have product delivery conditions in Hong Kong can be settled in cash, promoting trading and arbitrage opportunities between Hong Kong and other markets and attracting more investors to enter.
The latest news from HKEX shows that in terms of new product development, preparations are underway to launch 10-year Chinese government bond futures contracts to provide international investors with tools to manage RMB interest rate risks.
In terms of optimizing trading mechanisms and improving services, HKEX successfully implemented a strategy to raise the position limit of the derivative market at the end of 2023 to enhance the trading convenience and flexibility of investors while strengthening market risk management. Since May 9, 2022, HKEX has launched derivative product holiday trading services, gradually incorporating non-HKD priced futures and options products into holiday trading, and continues to provide trading and settlement services for these products on Hong Kong public holidays.
Starting on March 29, the derivative products that provide holiday trading services will continue to expand. All currency futures and options products under HKEX will be included in holiday trading, and investors can also trade these derivatives during public holidays in Hong Kong to manage foreign exchange risks.
Editor/tolk