Does HKCC CPs require to settle any HKCC Participant Additional Deposits (HPAD) during H Days? The settlement of HPAD, which is the CPs’ contribution to the Reserve Fund (RF), will not be required on H Days.
After the implementation of holiday trading, should the monthly review fall, or an ad-hoc review be triggered, on an H Day, HKCC will recalculate the RF based on the latest positions and informs all CPs of their recalculated HPAD on the first Trading Day (which is also the Business Day) after H Day(s).
What is the price snapshot for MMC calculation on H Day?Same arrangement as Business Day will be applied on H Day.
For the avoidance of doubt, as there is no trading for NH Products on H Day, the price snapshot of MMC for NH Products will be the daily settlement price on H-1 day.
Will Clearing House increase margin prior to or during a long holiday?Currently, HKCC will increase the margin levels temporarily (i.e. holiday margin) for some major products before public holidays. Same arrangement will continue to apply to the following products after the implementation of holiday trading:
(i) NH products (e.g. HSI and HSCEI products)
(ii) H products which has margin offset with NH products
For other H products which do not have margin offset with any NH products, normal margin will be applied. Nevertheless, HKCC has the discretion to apply holiday margins or increase margins on products which may pose liquidity concerns on H days.
With the implementation of Holiday Trading, we will continue to conduct adhoc margin review for H products on H Days (i.e. the effective day of increased margin rates can fall on H Day).
Nevertheless, for the scheduled monthly margin review, the effective day of new margin rates for all products including H products will remain as the next HK Business Day (i.e. not fall on H Day).
H CP is required to settle all margin obligations with the prevailing margin rates (including the adhoc increase in margin) on H Day.
Can CP fulfill CNH margins by USD fully?The current collateral policy for RMB margin requirement will remain the same on Holiday Trading Days, i.e. there is a fixed limit of RMB 1 billion for the RMB margin requirement. Where the Clearing Participant’s (CP’s) margin requirement is on or below the limit, the CP is allowed to fulfill all the RMB margin requirement by any acceptable collateral (such as USD cash) where non-cash collateral could satisfy up to 50% of the margin requirement. Beyond limit, the CP’s margin requirement shall be satisfied by RMB cash. Please refer to the Consultation Paper Appendix 5 paras 14 and 16 (p.27) for reference.
Does CP need to fulfill margin requirement for NH products on H Days?H CPs are required to settle all payment obligations (including obligations for HKD and other currencies) arising on H Days. NH CPs are not be required to fulfill any HKCC payment obligations during H Days, and outstanding payment obligation will be settled the next Business Day after an H Day (H+1 Day).
During HK and US mutual holiday, can clients settle margin call later than the next Trading Day?For the purpose of EP’s assessment under HKFE Rule 617(b) for the criteria of Established client, it is considered acceptable not to treat the outstanding margin call of the client as an unfulfilled margin call as long as the EP could obtain the documentary evidence that (i) there is sufficient funding with the bank to fulfil the margin obligations, (ii) fund transfer instructions have been placed with the bank pending completion due to the abovementioned reason and (iii) the fund transfer in (ii) being completed on the day which H Products open for trading immediately after US banking holidays.
Is HKEX supporting excess withdrawal on H day?HKEX is able to support the withdrawal process (we have such process in place today). However, on holiday, HKEX is capable to process the withdrawal, but the settlement banks are not able to support this on day 1 (due to number of concerns in its banking infrastructure/system and etc). This is under our radar and we are actively working with them.
Is it allowed to settle margin requirements of MSCI products in HKD on H Day?To alleviate the funding pressure on H Days, HKEX revises the 50-50 collateral rule for HKD and USD denominated contracts on H Days. H CPs are allowed to fulfill all their HKD and USD margin requirements by any acceptable collaterals (where non-cash collateral could satisfy up to 50% of the margin requirements) on H Days.
What is the timeline to expand Holiday Trading to other asset classes?HKEX plans to allow all non-HKD denominated futures and options to be H Products. Initial stage will include MSCI futures and options as H Products. Subject to market conditions and readiness after the initial stage, HKEX will further include futures and options of other asset classes to be H Products.
Would HKCC perform default management during H Days?The default management process during an H Days will be similar to the procedures on a Business Day. H Products which are not subject to holiday margin, HKCC will perform default management on HK public holidays. For H Products which are subject to holiday margin, the market risk exposure throughout the H Days will be mitigated by the margin collected beforehand, so there will be sufficient resources for HKCC to perform liquidation after H Days. HKCC retains the flexibility to perform liquidation on H Days.