Top Questions

The Securities and Futures Commission (SFC) is an independent statutory body responsible for regulating the market, safeguarding market integrity, and enforcing securities and futures market legislation. Parties regulated by the SFC include Hong Kong Exchanges and Clearing Limited (HKEX) and its subsidiaries (including the stock and futures exchanges and associated clearing houses), financial market intermediaries (namely securities dealers which include Exchange Participants; sponsors; share registrars; fund managers; and investment advisers) and investors.

The SFC’s statutory regulatory objectives are:

• to maintain and promote the fairness, efficiency, competitiveness, transparency and orderliness of the securities and futures industry;
• to promote understanding by the public of the operation and functioning of the securities and futures industry;
• to provide protection for members of the public investing in or holding financial products;
• to minimise crime and misconduct in the securities and futures industry;
• to reduce systemic risks in the securities and futures industry; and
• to assist the Financial Secretary in maintaining the financial stability of Hong Kong by taking appropriate steps in relation to the securities and futures industry.

Regulation of takeovers, share repurchases and privatisations, which may involve investor conduct, is also the responsibility of the SFC.

HKEX is the operator of Hong Kong’s central securities and derivatives marketplace and the front-line regulator of listed issuers (including listed companies). In this role, HKEX regulates listed issuers; administers listing, trading and clearing rules; and provides services at the wholesale level to customers of the exchanges and clearing houses, including issuers and intermediaries (namely investment banks or sponsors, securities and derivatives brokers, custodian banks and information vendors) who service investors directly. Services provided by the exchanges and clearing houses include trading, clearing and settlement, depository and nominee services, and information services.

For more SFC and HKEX regulatory information, please visit the SFC website at www.sfc.hk and the “How We Regulate” section under "Listing Regulations" of the HKEX website. 

The contract multiplier for HSI futures and options is 50 per index point.  The contract months for HSI futures are spot, next calendar and next two calendar quarter months.  The contract months for short-dated options contracts are spot, next two calendar and next three calendar quarter months, whereas those for long-dated options are the next five months of June and December. 

For more information, investors can refer to "Hang Seng Index Futures & Options" under "Products & Services - Derivatives Products" on the HKEX website.

Underlying stock price - The underlying stock price is normally the most significant factor affecting the price of an option.  In-the-money options enable holders to buy or sell the underlying stock at a better price than the prevailing securities market price.  They therefore cost more than the equivalent at-the-money and out-of-the-money options because there is more value in them.  And whether an option is in-the-money depends solely on the underlying stock’s price because the option’s strike price is fixed.  The difference between the strike price of an in-the-money option and the price of the underlying stock is called the intrinsic value. For example, a call option with a strike price of $45 when the underlying stock’s price is $50 has an intrinsic value of $5.  However, it is possible that the call option in this case will be traded above $5.  Even out-of-the-money and at-the-money options, which have no intrinsic value, will normally have some value in the market.  This is because there are other factors determining the value of the option.  These are called “extrinsic” factors (or sometimes "time value" factors).  The extrinsic factors are time until expiration, dividend expectation, interest rate and volatility.

Time Until Expiration - All other things being equal, the value of an option will diminish as the option approaches expiry, and the rate at which it diminishes will be faster the closer it gets to expiry so that close-to-expiry, out-of-the-money options can lose their value very quickly.  It is for this reason that an option is often referred to as a “wasting asset”.

Dividend - The dividend factor generally only applies to stock options because most other underlying assets do not pay dividends.  All other things being equal, a cash dividend will lower the share price by the present value of the dividend on the day the stock first trades “ex-dividend”.  The larger the dividend, the more the stock price is expected to fall.  This change in the stock price in turn affects the option premium.

A higher dividend results in a drop in the premium for the call but a higher premium for the put.

Interest rate - A rise in interest rates will raise the value of call options, and lower the value of put options.  Interest rates may be regarded as an opportunity cost.  Since an option is a leveraged instrument, a call option holder does not need to pay the full value of the underlying stock, and can invest remaining funds in interest-bearing instruments.

Volatility - Risk is the probability that the price of the underlying stock will move, within the life of the option, from its present value to a point where the option writer incurs losses.  The greater the probability that this will happen, the greater the risk and hence the higher the premium, whether call or put.

The degree of expected fluctuation in the underlying stock price determines the extent of the risk.  The measure of this fluctuation is most commonly referred to as “volatility”.  Implicit in any option premium are assumptions about the likely volatility of the stock.  For this reason, one generally speaks of the “implied volatility” of the option premium, ie the likely volatility of the underlying stock is “implied” by the option premium.  Expressed as a percentage, volatility is closely monitored by option market users as a vital indicator.

The impacts of the above factors on option premium are summarised below:

Taking into account the dividend payout of the underlying stock, the theoretical stock futures price is made up of three factors, including:

Pure Trading
Pure trading is mainly based on unidirectional investment strategies, where an investor buys or sells a specific quantity of futures contracts based on his own projection of the movement of the underlying stock.

Hedging
The purpose of hedging is to offset the negative impact of market moves on a portfolio’s overall return.

Risk management and transfer
Stock futures trading provides an efficient mechanism for allocating price risk from those who wish to avoid the price risk in stock holding to those who are interested in bearing the price risk for a potential return, and hence, can help reduce the price risk inherent in stock investment.

Arbitrage opportunities
Arbitrage refers to profiting from the difference between the prices of similar financial instruments in the futures and securities markets by buying low in one market and selling high in another.  Stock futures' prices are linked to the underlying stocks, so any deviation between the price of the underlying stock and the futures is likely to attract the attention of arbitragers.

Spread trading opportunities
Stock futures provide opportunities for investors to trade on the relative performance of difference stocks via spread trading.

Other factors being equal, the value of a shareholder's portfolio will not change on the ex-date. But for buyers or holders of stock futures, the case is different. If both the contracted price and contract multiplier of the stock futures remain unchanged, any adjustment to the stock price will have an unreasonable and unfair impact on the value of the stock futures position.

The HKFE will decide the adjustment ratio based on the principle of maintaining the fair value of futures contracts, and adjustment will only be made in case of any material change.  HKFE will publish the details of any adjustment and its Exchange Participants (ie futures brokers) are required to notify their clients of such adjustments.

¹ SPAN (Standard Portfolio Analysis of Risk) is a registered trademark of the Chicago Mercantile Exchange

Investors can utilise the standardised calendar spread combinations (combos) offered on HKATS. Each calendar combo is the simultaneous purchase and/or sale of two different calendar months with the same underlying. Calendar combos offer 40% reduction in margin requirements. Calendar combos can be facilitated by price makers through on-screen or block-trade execution.

HKEX offers a full suite of 45 calendar spreads for USD/CNH futures, covering any pair of the 10 listed contract months, effective from 19 June 2018.

• For the physically-settled USD/CNH futures, the contract will be settled on the final settlement day by principal exchange, i.e. contract size in US dollars versus final settlement value in RMB (contract size multiplied by final settlement price¹). Delivery of US dollars will be made by short-position holder (i.e. seller); and payment of the RMB will be made by long-position holder (i.e. buyer). Please refer to the illustration of final settlement procedures on HKEX website.
  
  
• The physically-settled USD/CNH options are European style, with only “in-the-money”²  options to be exercised at expiry. The contract will be settled on final settlement day by principal exchange, i.e. contract size in US dollars versus final settlement value in RMB (contract size multiplied by strike price). Delivery of US dollars will be made by call option writer or put option holder; and payment of the RMB will be made by the call option holder or put option writer. Please refer to the illustration of final settlement procedures on HKEX website.
  
  

  	Holder	Writer
  Call Options	Payment of the Final Settlement Value in RMB	Delivery of US dollars
  Put Options	Delivery of US dollars	Payment of the Final Settlement Value in RMB

• For the cash-settled EUR/CNH, JPY/CNH, AUD/CNH and CNH/USD futures, the contract will be settled on the final settlement day by cash settlement for difference in the settlement currency.

¹ For USD/CNH futures (options), final (official) settlement price is the USD/CNY (HK) spot rate published by the Treasury Market Association in Hong Kong at or around 11:30 a.m. on the Last Trading Day

² A call option is in-the-money if the official settlement price is greater than strike price. A put option is in-the-money if the strike price is greater than official settlement price.

¹ European market infrastructure regulation (“EMIR”) is the regulatory technical standards pursuant to Article 11 European Market Infrastructure Regulation (EU) No. 648/2012 of the European Parliament and of the Council.

² Commodity Exchange Act of the U.S. Commodity Futures Trading Commission (“CFTC”).

³ Continuous Linked Settlement System — a global clearing and settlement system for cross-border FX transactions

The WM/Reuters Intra-Day Spot Rate was launched in 1994, and is generally recognised as the FX market benchmark¹. The EUR/USD, JPY/USD and AUD/USD WM/Reuters Intra-Day Spot Rates are used for calculating the final settlement price for HKEX’s EUR/CNH, JPY/CNH and AUD/CNH futures.

Please refer to the Reuters website for further details:
https://financial.thomsonreuters.com/en/products/data-analytics/market-data/financial-benchmarks/spot-rates.html

¹ As cited by a report of the Financial Stability Board in 2014 http://www.fsb.org/wp-content/uploads/FX-Benchmarks-progress-report.pdf

While both products are China Government bond futures, they are traded separately in the offshore and onshore market. There are also notable contract specification differences between the two in areas such as contract size, trading days and hours, trading mechanism, position limit, and settlement arrangements.

Please refer to the Official Circular for further details on HKEX’s CGB Futures.

A market wide trading fee discount and two incentive programs will be offered from product launch 3 August 2026 to 30 Jul 2027 (both dates inclusive).

Please refer to the Incentive Programs Circular for further details.

The Bond Basket is used to determine the FSP, where it shall be composed of bonds in the Bond Universe which fulfils the following criteria:

1. Publicly issued by the China Ministry of Finance and denominated in RMB;
2. Tradable in the China Interbank Bond Market (“CIBM”);
3. Book-entry treasury bonds with fixed coupon rates (annual coupon payment); and
4. With original term to maturity of no more than 7 years, and remaining term to maturity greater than 4 years and less than 5.25 years as of the Last Trading Day of the futures contract

The two most liquid bonds with the highest Average Daily Turnover (“ADT”) in the observation period will be selected from the Bond Universe to construct the Bond Basket. The observation period shall exclude the bond’s first CIBM trading day, and be measured by the immediately preceding 10 CIBM trading days from the Bond Basket Confirmation Day. Bonds with an observation period of less than 10 CIBM trading days will not be considered as a Bond Basket constituent.

You may reference the below for Bond Basket selection illustration:

HKEX’s CGB Futures is a cash-settled product upon contract expiry, the FSP is based on the Bond Basket of the futures contract, which is determined and announced on the last trading day (“LTD”) (the second Friday of contract month) for each contract. If the LTD is not a Trading Day or it falls on a Chinese Mainland public holiday, the LTD shall be the preceding Trading Day which is also a business day in Chinese Mainland.

ChinaBond Pricing Center Co., Ltd (“CBPC”) is a benchmark pricing platform for bonds with its data widely used by both onshore and offshore participants. The HKFE Clearing Corporation Limited (“HKCC”) will determine the FSP for each contract which shall be the reference price of the relevant Bond Basket provided by CBPC on the LTD. The formula of FSP is as follows:

The Bond Basket will be confirmed and published on HKEX’s website by day-end on the Bond Basket Confirmation Day (a day which is 20 HKFE trading days prior to the Last Trading Day of such contract). If such a day is not also a CIBM trading day, the Bond Basket Confirmation Day will be the preceding HKFE trading day which is also a CIBM trading day. Once confirmed, the Bond Basket for a futures contract shall remain unchanged until contract expiry.

Prior to the Bond Basket announcement, HKEX may publish an indicative Bond Basket on HKEX's website daily to indicate what the confirmed Bond Basket could be. The constituents of the indicative Bond Basket may be adjusted in response to changes in liquidity rankings.

You may reference the below for Bond Basket announcement illustration:

The methodology will be reviewed from time to time to ensure the Bond Basket remains suitable and representative, allowing market participants to achieve their hedging / trading objectives.

The Bond Basket constituents and other relevant information of each futures contract is available under the “Bond Basket Information” section of the HKEX 5-Year China Government Bond Futures product webpage.

The HKEX’s 5-Year CGB Futures will be a Holiday Trading Product (“H Product”), it will follow the same trading calendar for other H Products and be traded on all weekdays (Monday to Friday) except New Year’s Day. Only Holiday Trading Exchange Participants can trade the H Product.

The trading hours will be from 9:30 a.m. to 4:30 p.m. After-Hours trading is not applicable at this stage.

Please refer to HKEX’s Trading Calendar webpage for further details.

Investors can file error trade claims to the Exchange if the trades deviate from the predefined Error Trade Price Parameters. The error trade parameter is 2% from Notation Price. Large-Scale Error Trade claims (“LET”) are also available. HKEX will consider factors such as the number of trades, counterparties, and contract series involved, to determine whether the claim should be handled as a LET claim. A product specific requirement for LET is that the LET price must deviate at least 4% from the Notation Price.

Block trades consist of large buy and sell orders that are privately negotiated outside of the public auction market. The minimum volume threshold for a block trade is set at 50 contracts, and the permissible price range for these trades is within 2%.

Please refer to HKEX’s Block Trade Facility webpage for further details.

HKATS set order size limits for each product to maintain market integrity. Orders that exceed the prescribed limit will be rejected by the system. The maximum order size limit for entering orders into HKATS is 1,000 contracts.

Please refer to HKEX’s Order Size Limit webpage for further details.

HKEX has appointed Liquidity Providers (“LP”) and Active Traders (“AT”) to support the product. LP are responsible for providing continuous two-way price quotations for all outstanding futures contracts, thereby facilitating trading activities. AT contributes to building stable liquidity for investors.

Please refer to the Liquidity Providers section of HKEX’s CGB Futures product webpage for further details.

Exchange Participants (“EP”) are required to adhere to position limits. For the 5-Year HKEX's CGB Futures, the position limit is set at 22,000 net contracts in all Contract Months combined, per Exchange Participant for the Exchange Participant’s own behalf; and 22,000 net contracts in all Contract Months combined per Client.

EP holding positions in excess of the Reporting Level for its own account or for any client shall file a LOP report. The threshold for LOP reporting for HKEX's CGB Futures is 2,500 open contracts in any one Contract Month, per EP for the EP’s own behalf; and 2,500 open contracts in any one Contract Month per Client.

Please refer to HKEX’s Large Open Positions and Position Limits webpage for further details.

The daily settlement price of the product is determined based on the latest available market price before Market closes, if it is not available the daily settlement price shall be calculated in accordance with the HKCC’s waterfall methodology.

Similar to other HKFE products, HKCC shall calculate the margin requirements of its participants at the end of each trading day.

Chinese Mainland holiday margin will be implemented during trading days over Chinese Mainland holidays. It will be different to the margin level on normal trading days to cater for the overnight risks in the onshore market.

Please refer to the Margin table section of HKEX’s CGB Futures product webpage for further details.

Acceptable collaterals for initial margin include cash collateral (in HKD, EUR, RMB, and USD) and non-cash collateral (such as Exchange Fund Bills and Notes, and US Treasuries). For variation adjustment, only cash collateral in the settlement currency (i.e. RMB) is accepted.

When the currency of the cash or non-cash collateral is different from the settlement currency of the contract, a haircut will be applied to the collateral at a pre-determined rate.

HKEX’s website contains the necessary information in relation to the futures contract as well as its Bond Basket. Participants may refer to information vendors’ platform for China Government Bond data, where the historical Bond Basket and theoretical contract price can be constructed and calculated accordingly.

Eligibility is consistent to HKFE’s current guidelines for listed derivatives; investors may refer to HKFE’s rules and procedures for requirements. EPs shall perform due diligence on their clients to ensure trading eligibility. Investors should also perform their own trading eligibility assessment.

For instance, HKEX’s CGB Futures are considered to be foreign security futures products by the U.S. SEC and the U.S. CFTC. As the underliers of HKEX’s CGB Futures are bonds issued by a foreign government eligible to be registered with the U.S. SEC under Schedule B of the Securities Act of 1933, HKEX’S CGB Futures are qualified to be exempted from registration by the U.S. SEC under its order issued on 30 June 2009 (the “SEC Order”). Only eligible U.S. market participants (primarily “qualified institutional buyers”) may trade these foreign security futures products in accordance with the terms and conditions of the SEC Order and subsequent guidance issued by the U.S. CFTC in 2010. U.S. persons and persons located in the United States should review carefully the eligibility requirements and make their own determination. Additional information is available at HKEX’s CGB Futures product webpage.

• It facilitates hedging and arbitrage in the Asian time zone
• It gives exposure to a network of over 30 HKFE participants with Mainland backgrounds and their ability to attract Mainland commodity investors
• Exposure to liquidity from global financial market players who trade commodities

Client Connect is accessible from PC, tablet and mobile device through internet browsers. In general, you should be able to access Client Connect with a stable internet connection.

If you are a CCDA, the email address provided in the Client Connect Delegated Administrator Rights Application / Maintenance Form will become your login ID.

If you are a Business user, the email address your CCDA entered when setting up the account will become your login ID.

All users will receive a system email when their accounts are ready, they have to setup their own password by following the instructions on the email.

HKEX is a China anchored and globally connected exchange. Hong Kong opens the key gateway between China and international markets. Stock Connect provides a convenient and effective cross-border market connecting China with the world. We have access to a diverse and global investor base with both institutional and retail investors.

Our success as a global premier exchange is also credited to transparent listing rules and a well-tested listing regime. Moreover, we provide convenient post-IPO fund raising channels to promote the continued development of companies.

Hong Kong, as a compelling listing and fundraising venue, accommodates IPO transactions of all sizes, including mega IPOs, and has a track record of securing robust investor demand to price a successful transaction. We retained the global IPO fundraising crown in 2019 and ranked No.1 for seven times in the past 11 years.

Primary and Secondary Listings 

Overseas companies may choose to apply for a primary or secondary listing on the Exchange.  Primary listed companies normally trade all or the majority of their listed equity securities on the Exchange and need to fully comply with the Listing Rules, unless specifically waived.

Secondary listed companies are primarily listed on another stock exchange and the majority of their equity securities are usually traded outside Hong Kong.  As they already comply with the rules of their primary exchange, we grant them extensive waivers from our Listing Rules. Secondary listings are permitted on the Main Board (but not GEM) if the exchange of the applicant’s primary listing provides standards of shareholder protection which are at least equivalent to those provided in Hong Kong.

Also, with the exception of Qualifying Issuers (see “Qualifying Issuers” section below), a secondary listing applicant must have a “centre of gravity” outside Greater China.

An overseas company can, alternatively, opt for a dual-primary listing where it is subject to both full requirements here and those of another market.

Qualifying Issuers 

Qualifying Issuers are issuers primary listed on a Qualifying Exchange (i.e. the New York Stock Exchange, Nasdaq Stock Market or the Main Market of the London Stock Exchange (and belonging to the UK Financial Conduct Authority's "Premium Listing" segment)). Qualifying Issuers are subject to additional and modified requirements of Chapter 19C of the Main Board Listing Rules.

Listing by introduction

An overseas company that is already listed on another stock exchange may list in Hong Kong by introduction through dual-primary or secondary listing without a fund raising. This form of listing is appropriate for applicant that has a wide shareholder base and does not wish to incur additional listing expenses for a fund raising.

The actual listing timetable depends on many factors, including the progress of due diligence, preparation of application materials, regulatory approval and conditions of the capital market.

Application preparation

The application preparation mainly involves engagement of professional working parties and due diligence works by licensed sponsors, legal advisers (for the applicant and the sponsors), auditors and other third parties (e.g. tax consultants, internal control advisers, etc.), drafting and preparation of the application materials. The length of preparation time depends on the readiness of the applicant’s track record and other conditions. It is required by the Listing Rules that an IPO applicant should appoint sponsor(s) at least 2 months before submission of its IPO application (A-1 filing). However, the preparation process may take longer as the professional intermediaries require more time to conduct due diligence depending on the circumstances of the applicant e.g. the industry it operates in, the size of its business operations may extent to many other jurisdictions, etc.

Regulatory vetting and approval

After performing adequate due diligence on the applicant by the sponsor, the applicant is required to submit the formal listing application (Form A1 for Main Board and Form 5A for GEM), an application proof of listing document and other related materials to the Listing Division of the Exchange for regulatory vetting. The vetting time for each applicant is subject to case-specific factors, including the complexity of the applicant’s business as well as whether there are any novel issues. The valid period for a listing application from the submission to the listing date is six month. A monthly Progress Report  for new listing applications is published on HKEX news website.

Marketing and listing

After the Exchange’s Listing Committee approves the listing application, the applicant could commence the marketing of its securities which will ordinarily be approximately one month (for investors roadshows, public offering process and pricing etc.) before the securities can be listed and traded on the Exchange.

In the context of preparing a potential applicant for listing, if the issuer and its professional advisers have queries regarding the interpretation of the Listing Rules which are novel and specific, the issuer or the professional advisers may contact the Listing Division to seek confidential guidance at an early stage before the submission of formal listing application, i.e. to submit a pre-IPO enquiry. This can provide the potential applicant with a level of certainty in relation to the issue and help it make the decision whether to list in Hong Kong. A pre-IPO enquiry is not a means to pre-vet a listing application.

For pre-IPO enquiries, you may refer to the following link to find a detailed contact list here.

Stock Code Balloting Scheme - Each issuer that is approved for listing is invited to select a stock code. Five stock codes will be drawn by the Exchange from a pool of 50 available stock codes (Normal Ballot Pool), and the issuer may choose one from the five stock codes. Since November 1999, the Exchange has launched the Stock Code Balloting for Charity Scheme to raise money for worthwhile causes as the demand for auspicious codes for new listings increased and HKEX sought to encourage more donations to charity. The Exchange does not charge for the Stock Code Balloting Scheme.

Effective since 1 July 2020, under the updated Stock Code for Charity Scheme, if a successful listing candidate or product issuer has a preference for a particular code – available either in the Normal Ballot Pool or Special Pool (i.e., numbers deemed to be auspicious) subject to prevailing Stock Code Allocation Plan – it may choose one stock code without going through the balloting process. In this instance, a donation of HK$3 million and HK$2 million will be required for each security of Main Board and GEM company respectively, while a donation of HK$1 million will be required for each Exchange Traded Product (including Exchange Traded Fund and Leveraged & Inverse Product).

All donations made by successful listed issuers will go to HKEX Foundation Limited (HKEX Foundation), a recognised charitable institution which is exempt from tax under section 88 of the Inland Revenue Ordinance in Hong Kong. For information about HKEX Foundation’s philanthropic initiatives, please refer to the HKEX Group website.

The Production PG Server is supplied by HKEX while Participants need to prepare their own PC for PG development and end-to-end test. The reference PC requirement for the PG is available via Client Connect (https://connect.hkex.com.hk/). However, the requirement of the PSS is subject to the Participants’ application.

VaR Platform is a risk engine for risk calculation, which is applicable to HKSCC Clearing Participants (CPs) only. VaR Platform offers risk related tools (1) Report Access Platform (RAP) for retrieval of VaR Platform reports and (2) VaR Online for margin and stress test simulation.

RAP is a platform for retrieval of VaR Platform, CCASS and CCMS reports and data files via secure file transfer protocol (SFTP) facility.

CPs can apply for a RAP User ID by submitting the RAP Registration and Maintenance for HKSCC or HKCC/SEOCH or Share Registrarform (eService: TechS 8) via Client Connect (https://connect.hkex.com.hk/) with ip addresses of designated workstations; for details please refer to the RAP Technical Guide.

For CPs who would like to develop their own tools to conduct margin and stress test calculation/simulation, can subscribe to access the optional “RPF folder” for retrieval of RPF by submitting the RAP Registration and Maintenance for HKSCC or HKCC/SEOCH or Share Registrar form (eService: TechS 8) via Client Connect (https://connect.hkex.com.hk/).

CPs should note that due to large file size, retrieval of RPF would require a larger bandwidth, please refer to section 7.1 of the RAP Technical Guide available in Client Connect (https://connect.hkex.com.hk/) for the projected download time under different Securities and Derivatives Network (SDNet) bandwidths.

VaR Online is a browser based tool to facilitate CPs to conduct margin and stress test simulation.

VaR Online is a browser based tool to facilitate CPs to conduct margin and stress test simulation.

CPs should refer to the VaR Platform reports, “MTM and Margin Requirement Report” (RMAMR01 and RMAMR03) for estimates of their end-of-day marks and margin requirement.  Please refer to VaR Platform User Guide available in Client Connect (https://connect.hkex.com.hk/) for report availability and details.

CPs may simulate the end-of-day margin requirement by using VaR Online, while CPs should note that the positions shown in VaR Online (when setting “Used positions” = “Real-time” under the “SETTINGS” tab) include pending positions from current and previous trading days, as well as due and overdue positions which will be updated from time to time throughout the day. For CPs who want to simulate the requirement that is closer to the final figure, may adjust the positions in VaR Online by excluding due positions on the current day and add Exercised Options Trade (EOT) positions accordingly. CPs may refer to VaR Online User Guide available in Client Connect (https://connect.hkex.com.hk/) for details.

To mitigate potential under-collateralisation risk if an adverse mark-to-market change is observed after the intra-day call, excess cash collateral will NOT be released during intra-day, rather will only be released during day-end CCASS payment process.

In general, the relationship between Tier P sub-portfolio risk profile and corresponding margin requirements is summarized as follows:

CPs may pledge Specific Stock Collateral (SSC) or Specific Cash Collateral (SCC) to settle transactions by stock or money. For detail of the operation, please refer to CCMS Terminal User Guide section 7.1 Collateral Management Services available in Client Connect (https://connect.hkex.com.hk/).

CPs may pledge Specific Stock Collateral (SSC) or Specific Cash Collateral (SCC) to cover CNS positions which will be excluded from the marks and margin requirement calculation.  If the collateral applied is at Tier P sub-portfolio, the margin requirement can be higher or lower subject to the characteristic of sub-portfolio risk profile after pledged.  For details of the relationship between Tier P sub-portfolio risk profile and margin requirement, please refer to the previous FAQ “What is the relationship between Tier P sub-portfolio risk profile and corresponding margin requirements?”.

CPs can also opt to replicate the scenario of SSC or SCC arrangement by using VaR Online to simulate the requirement.  Please note that SSC are pledged in CCMS according to corresponding stock code and settlement date while SCC are arranged in CCMS according to corresponding stock code and trade date.  All cross-day position netting should be performed after considering SSC / SCC.  For more details on covering positions and cross-day position netting, please refer to section 4.3 “Specific Stock / Cash Collateral Position Cover” and section 4.5 “Cross-day Position Netting” of the Initial Margin Calculation Guide available in Client Connect (https://connect.hkex.com.hk/). 

CP should refer to VaR Platform report, “Daily Participant Margin Multiplier Report” (DWH0081C) for their own margin multipliers and the corresponding effective dates, the flat rate margin multiplier takes effect on the next business day after the review date.

The latest Tier N margin rate and Default Fund threshold information are available in Clearing – Risk Management section in HKEX website (https://www.hkex.com.hk/Services/Clearing/Securities/Risk-Management?sc_lang=en). Any changes to the above information will be announced via circular.

A monthly Default Fund review will take place at the first business day of each month, subject to ad-hoc review from time to time. Circulars will be issued on the day of Default Fund review (i.e. first business day of the month); while CPs must pay their Default Fund contribution requirements, if any, by 17:45 (via DDI) on the following business day.

CPs can refer to the following reports generated after the Default Fund review and collateralisation for their requirements:

• Default Fund Requirement Report (RMADF01) – available around 10:30 via RAP
• Statement of Default Fund Contribution (CCMDF02) – available around 12:00 noon via CCASS and RAP

CPs should refer to CCASS report “Statement of Default Fund Contribution” (CCMDF02) for their actual contribution requirements, which should be paid by 17:45 (via DDI) on the following business day.

The TPC model enables easier access to the cash market through segregation of trading and clearing participantships.  An Exchange Participant who trades on the Stock Exchange of Hong Kong (SEHK) has the added option[1] to choose to outsource its clearing functions for Exchange Trades and/or China Connect Securities Trades to General Clearing Participant(s) who provides clearing services to Exchange Participants. Under TPC, an Exchange Participant without a clearing participantship in CCASS is referenced as a Non-Clearing Participant (NCP)[2]. An Exchange Participant who is an (i) NCP or (ii) a Clearing Participant who is not a China Connect Clearing Participant and who has entered into a Clearing Agreement with a General Clearing Participant for the clearing of its China Connect Securities Trades is referenced as a Non-China Connect Clearing Participant (NCCCP)[2].

[1] At present, an Exchange Participant, although being a CCASS Participant, can choose to outsource its clearing and settlement operations to a Settlement Agent.

[2] NCP/ NCCCP itself is not a participant type either in SEHK or HKSCC. It is a generic term for ease of classification and reference only.

No, this does not constitute a change of ownership; no additional stamp duty is therefore payable as a result of TPC activities.

For the avoidance of doubt, stamp duty on China Connect Securities Trades is directly collected by HKSCC from GCP and hence the GCP is liable for the late payment or non-payment of stamp duty related to trades in China Connect Markets.

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For details, please refer to corresponding Appendix A to HKCC Rules and Appendix G to SEOCH Procedures.

The minimum requirements for the SDNet bandwidth are as below:

There is limitation on number of rows depending on respective views of DCASS Online.  For example, the limitation on “Trade history” view is 60,000 rows; Participants are recommended to tighten the searching “to” and “from” time.

Participants who have high volume of usage on particular function should develop their own OAPI program.

If Participants have already connected to DCASS via DCASS Online at the computer, they should not open any other applications of HKEX using Google Chrome at the same computer.  Otherwise, there will be an error message “Server Error” popped up.

Yes, Participants can only input plain English alpha-numeric characters in the following editable fields at OAPI programs:

 

Field name	Usage	For HKATS OAPI programs	For DCASS OAPI programs
“ex_client_s”	For input account	√
“exchange_info_s”	For input free text	√
“give_up_info_s”	For input free text for Order Level Give Up	√
“lei_s”	For input free text for Legal Entity Identifier	√
“give_up_text_s”	For input free text for Give Up Trade		√
“customer_info_s”	For input free text for Rectify Trade		√

If a Participant expects that it cannot complete the post-trade activities for T Session before the System Input Cutoff Time, he should contact DCASS Hotline at 2979-7222 as soon as possible.  Participant should complete and submit the duly authorized on-behalf input request forms to the Clearing Houses before System Input Cutoff Time.  The Clearing Houses would perform the input on the Participant's behalf on a best effort basis, depending on the resources available at the time.  The Clearing Houses will not accept any on-behalf input request forms submitted after the deadline of System Input Cutoff Time.

For respective System Input Cutoff Time, please refer to HKCC Rules section 101 and SEOCH Rules section 101.

On-behalf input will be subject to a charge as stipulated in the Rules and Procedures of the Clearing Houses. Processing charge for on-behalf input is $50 per transaction with a minimum charge of $500 per day.

For SEOCH Participant, trade adjustments in respect of a Block Trade shall be submitted by SEOCH Participants at any time 30 minutes prior to the System Input Cutoff Time on the same Trading Day or 30 minutes prior to the System Input Cutoff Time on the next Trading Day.  For details, please refer to SEOCH Procedures 5.4.5.

For HKCC Participant, for Block Trades executed during the T Session on a Trading Day, trade adjustment request may be submitted at any time 30 minutes prior to the System Input Cutoff Time on the same Trading Day or 30 minutes prior to the System Input Cutoff Time on the next Trading Day.  For Block Trades executed during the T+1 Session on a Trading Day, trade adjustment requests may be submitted at any time 30 minutes prior to the T+1 Session Cutoff Time on the same Trading Day or 30 minutes prior to the System Input Cutoff Time on the next Trading Day.  For details, please refer to HKCC Procedures section 1.4.1.

For respective System Input Cutoff Time, please refer to the HKCC Rules section 101 and SEOCH Rules section101.

For T+1 Session Cutoff Time, please refer to HKCC Rules Appendix B.

The details of each account type can be found in HKCC Procedures chapter 1, SEOCH Procedures chapter 1 and chapter 2 of DCASS User Guide.

Each HKCC Participant will have one COCA.  Upon the requests of HKCC Participants, Clearing House may in its absolute discretion establish and maintain more than one COCA for the HKCC Participants.  COCA is for the recording of positions of individual clients of an HKCC Participant which are of an offset nature.  The offset criteria can be found in HKCC Procedures chapter 2.  Positions in each portfolio for offset claim must belong to the same client.  Positions in COCA are maintained on a GROSS basis, but margined on a NET basis.  HKCC Participants should ensure that all positions maintained in COCA for margin offset can be reconciled with their internal records.

Upon the request of SEOCH Participants, HKEX may in its absolute discretion establish one COCA.  Positions in COCA are maintained on a GROSS basis, but margined on a NET basis.  SEOCH Participants should ensure that all positions maintained in COCA for margin offset can be reconciled with their internal records.  Margin offset through COCA must be claimed in pairs of client positions and only the position pairs fulfilling ALL the following conditions are eligible:

For respective System Input Cutoff Time, please refer to HKCC Rules section 101 and SEOCH Rules section 101.

If Participants would like to see only the trades of Stock Options market, they can make use of the "Markets" window to filter the trades.

For (i) and (ii), Participants can use the Cross Product Netting function in the "Account Position" window of DCASS Online to input position closing request for both auto-netting and non auto-netting accounts. Nevertheless, off-settable positions in auto-netting accounts will be automatically closed out during AB process.

For (iii), participants should submit Form 4 “On-Behalf Internal Position Adjustment Request Form” to HKCC for the position closing request for all accounts.  Off-settable positions in auto-netting accounts WILL NOT be automatically closed out during AB process.

SEOCH Participants can set their own automatic exercise limit, in term of % or fixed value, per weekly and/or monthly stock options call and/or put per account and/or per company.  For details, please refer to chapter 4 of DCASS User Guide.  Once a SEOCH Participant has setup its own automatic exercise limit in DCASS, such exercise limit will override SEOCH’s prescribed exercise criteria and take effect immediately.

SEOCH Participants should take extra cautious and are reminded to have proper internal control when setting up their own exercise limit in DCASS.  SEOCH Participants should review their prescribed exercise limit and make necessary adjustments from time to time.

For HKCC, the settlement fee will be charged on any unclosed spot month futures contracts on its last trading day.
For HKCC, the exercise fee will be charged on any exercised options contracts while assignment fee will be charged on any assigned options contracts.

For SEOCH, only exercise fee will be charged on any exercised stock options contracts.

SEOCH will charge Exercise Fee only on exercised stock options contracts, no Exercise Fee is charged on assigned stock options contracts.  For physical settlement of underlying stock, Stock Settlement Fee, Trading Fee, SFC Transaction Levy, AFRC Transaction Levy, Stamp Duty on stock transaction and Transfer Deed Stamp Duty are charged.

For details of fee scale, please refer to HKEX website.

For HKCC Participants, the fees and costs applicable are listed in Apendix A to HKCC Rules.

For SEOCH Participants, the fees and costs applicable are listed in Appendix G to SEOCH Procedures .

Please refer to rules of HKCC and  SEOCH  for details of how interest, costs and charges are calculated. The interest, costs and charges will be calculated daily and posted or deducted from the relevant CCMS Collateral Account on the first business day of the following month. Clearing Participants can refer to daily CCMS Report “Collateral Parameters Information List” (CCMIR02) for the rebated interest rates and monthly CCMS report “Monthly Interest & Accommodation Fee Report – Detail” (CCMIA02) for any interest, costs and charges posted or deducted.

Participants should access CCMS via 2-Factor Authentication (2FA) with regular password and One-Time Password (OTP) generated from the ForgeRock Authenticator App or email.  

Furthermore, Participants should appoint their own Delegated Administrators (DAs) to manage the basic security profile of their own CCMS users.  DAs can access CCMS's security management functions at https://www.ccass.com/dms.  Please refer to the CCMS Terminal User Guide on Client Connect for details.