Launching ETFs in Hong Kong  

Attractiveness of Hong Kong ETF market
What are ETFs?

Types of ETFs

Eligibility of ETF Managers

Authorization of ETFs 

Listing of ETFs

Trading of ETFs 

Clearing of ETFs

Fees required

On-going disclosure


Attractiveness of Hong Kong ETF market

  • HKEX is one of the leading ETF markets in the region in terms of number of listing, turnover value and Asset Under Management
  • Regulations of the ETF market in Hong Kong follow international standards
  • HKEX provides efficient and robust trading, clearing and settlement facilities
  • HKEX has a wide distribution network with around 500 Stock Exchange Participants from around the world
  • Professional intermediaries (such as lawyers, custodians, Participating Dealers (PDs), information vendors, etc.) are widely available in Hong Kong
  • Market making is available for ETFs listed on HKEX


What are ETFs?

ETFs are passively-managed open-ended funds, unit trust or similar investment arrangement that is listed and/or traded on HKEX.  ETFs in Hong Kong are authorized by the Securities and Futures Commission (SFC) of Hong Kong.  The principal objective of an ETF is to track or replicate the performance of an underlying index.  The index can be on a stock market, a specific segment of a stock market, a group of stock markets, bonds or commodities.  Some ETFs in Hong Kong also track the performance of single commodities, such as gold.


Types of ETFs

ETFs listed in Hong Kong can be broadly grouped into three types – Physical, Synthetic and Futures-based.

Physical ETFs directly buy all the assets needed to replicate the composition and weighting of their benchmarks (e.g. constituents of a stock index).  However, some only buy a portion of the assets needed to replicate the benchmarks or assets which have a high degree of correlation with the underlying benchmarks.  Some physical ETFs with underlying equity-based indices may also invest partially in futures and options contracts.

Synthetic ETFs do not buy the assets in their benchmark, but invest in financial derivative instruments to replicate the benchmark’s performance.  The ETFs are required to have collateral when investing in derivatives.  An ETF’s net risk exposure to any single counterparty cannot be more than 10% of its NAV.  Details on collateral requirements should refer to the SFC’s press release


Futures-based ETFs use futures indices as their underlying benchmarks to replicate their composition and weighting so as to give the ETFs the performance of the benchmarks.

There are also requirements for identification of synthetic ETFs and futures-based ETFs. For synthetic ETFs listed on HKEX, a marker “X” is placed at the beginning of their English and Chinese stock short names for easy identification and an asterisk with annotation (*This is a synthetic ETF) is placed right after the name of a synthetic ETF in offering documents and marketing materials. Details can be referred to the joint press release issued by the SFC and HKEX. For future-based ETFs listed on HKEX, a marker "F" is placed at the beginning of their English and Chinese stock short names.


Eligibility of ETF Managers 

ETF managers must be licensed by the SFC prior to issuance of any ETF in Hong Kong.  Potential ETF managers should contact the SFC for information about their eligibility as fund managers.  Related information can be found on the “licensing related matters” section of the SFC website.


Authorization of ETFs

Pursuant to the Securities and Futures Ordinance (SFO), authorization by the SFC is required for all ETFs listed in Hong Kong.  The Code on Unit Trusts and Mutual Funds establishes guidelines for the authorization of collective investment schemes (CIS) which include ETFs.  Potential ETF managers should seek authorization of their ETFs from the SFC prior to seeking a listing on HKEX.


Listing of ETFs

After obtaining the SFC’s “approval in-principle (AIP)”, formal listing application of an ETF can be submitted to the Listing Division of HKEX.  Listing of ETFs is regulated under Chapter 20 of the Listing Rules and application form is available on HKEX website.



Market making

The SFC requires all ETFs listed on the Exchange to have at least one market maker, namely Securities Market Maker (SMM).  Details of securities market making can be found here.  Obligations and incentives for SMM are set out here and in the Fourteenth Schedule of the Rules of the Exchange.  Click here for the latest list of SMM for all ETFs.

Short selling

An ETF may be designated by HKEX for short selling with tick rule exemption (i.e. short sales below the best current ask price) from its listing day.  The list of ETFs eligible for short selling with tick rule exemption is available here.

Stamp duty

Stamp duty for all ETFs is waived effective 13 February 2015.

Stock code allocation

The stock code ranges (2800 - 2849 and 3000 - 3199) are reserved for ETFs (other than RMB and USD ETFs).  For RMB ETFs, the stock code ranges  (82800 - 82849 and 83000 - 83199) are reserved.  For USD ETFs, the stock code ranges  (9800 - 9849 and 9000 - 9199) are reserved. ETF managers can either choose a favorite stock code with donation or to ballot for a stock code within the range.

Potential ETF managers and SMM are advised to contact Trading Division of HKEX in relation to admission to trading and market making arrangements as early as possible in parallel with the process of seeking SFC authorization.



ETF managers will have to apply to Clearing Division of HKEX for the admission of the ETF units as eligible securities for deposit, clearing and settlement in CCASS before the ETF is listed.

ETFs issued on non-HK stocks

HK Conversion Agency Services Limited (HKCAS), a wholly owned subsidiary of HKEX, can act as a service agent to facilitate the book-entry deposit/withdrawal of the ETF units into/from CCASS for the ETF created/redeemed outside CCASS.  The ETF manager, trustee (or custodian), registrar, PDs and any other relevant parties need to sign a service agreement with HKSCC and HKCAS.

ETFs issued on HK stocks

HKCAS can act as the ETF’s conversion agent.  ETF managers can make use of CCASS to facilitate the settlement of unit creation and redemption instructions submitted by PDs.
A participation agreement (signed by the ETF manager, trustee, PD, HKSCC, HKCAS and any other relevant parties) and a conversion agency agreement (signed by the ETF manager, HKSCC and HKCAS) are required
Potential ETF managers are advised to contact HKEX’s Clearing Division as early as possible in parallel with the process of seeking SFC authorization.


Fees required

For fees charged by the SFC for fund authorization, please contact the SFC directly.


Fees charged by HKEX relating to the listing of ETFs include the following:

Initial Listing Fee: HK$20,000
Annual Fee: HK$15,000

Fees charged by HKCAS as service agent and conversion agent:

Service agent:

Book-entry deposit / withdrawal transaction: HK$1,000 per transaction, payable by PD
Reconciliation fee: HK$5,000 per month, payable by the ETF manager

Conversion agent:

Conversion agent’s fee: HK$5,000 – $12,000 depending on the aggregate market value of creation/redemption instructions of a PD for the day, payable by the ETF manager
Unit cancellation fee: HK$1 per board lot, payable by the ETF manager


On-going disclosure

ETF managers are required to comply with the continuing obligations as stipulated in the Listing Rules (click here letter for details).  In addition, ETF managers are required to submit a daily report for their ETFs to disclose such information as NAV, AUM, total units outstanding, premium/discount, etc. Click here for the templates (1 ETF / 10 ETFs) and their respective specifications (1 ETF / 10 ETFs).