Hong Kong Exchanges and Clearing Limited (HKEx)

In his 1999 Budget Speech, Hong Kong's Financial Secretary announced comprehensive market reform of the stock and futures markets. The reforms were designed to increase competitiveness and meet the challenges of an increasingly globalised market.

Under the reform, The Stock Exchange of Hong Kong Limited, Hong Kong Futures Exchange Limited demutualised and together with Hong Kong Securities Clearing Company Limited, merged under a single holding company, HKEx.

The merger was completed on 6 March 2000 and HKEx listed its shares by introduction on the stock exchange on 27 June 2000.

Securities market

Reports of securities trading in Hong Kong date back to the mid-19th century. However, the first formal market, the Association of Stockbrokers in Hong Kong, was not established until 1891. The Association was re-named the Hong Kong Stock Exchange in 1914.

A second exchange, the Hong Kong Stockbrokers' Association was incorporated in 1921. The two exchanges merged to form the Hong Kong Stock Exchange in 1947 and re-establish the stock market after the Second World War.

Rapid growth of the Hong Kong economy led to the establishment of three other exchanges - the Far East Exchange in 1969; the Kam Ngan Stock Exchange in 1971; and the Kowloon Stock Exchange in 1972.

Pressure to strengthen market regulation and to unify the four exchanges led to the incorporation of the Stock Exchange of Hong Kong Limited in 1980. The four exchanges ceased business on 27 March 1986 and the new exchange commenced trading through a computer-assisted system on 2 April 1986. Prior to the completion of the exchange merger in March 2000, the unified stock exchange had 570 participant organisations.

Derivatives market

Established in 1976, Hong Kong Futures Exchange Limited is a derivatives leader in the Asia-Pacific region. It provides efficient and diversified markets for trading futures and options contracts by its more than 130 participant organisations, including many that are affiliated to international financial institutions.

Derivatives market under HKEx operates futures and options markets on a broad range of products, including equity index, stock and interest rate. HKEx and its subsidiaries, HKFE Clearing Corporation Limited and SEHK Options Clearing House Limited, operate rigorous risk management system which enables participants and their clients to meet their investment and hedging needs in a liquid and well-regulated market place.

Stock settlement

Hong Kong Securities Clearing Company Limited was incorporated in 1989. It created CCASS, the central clearing and settlement system, which started operating in 1992 and became the central counterparty for all CCASS participants.

The clearing operation is based on the immobilisation of share certificates in a central depository. Share settlement is on a continuous net settlement basis by electronic book entry to participants' stock accounts in CCASS. Transactions between CCASS participants are settled on T+2, the second trading day following the transaction.

The company also offers nominee service.