Hong Kong Exchanges and Clearing (HKEx) will implement stock futures market changes and introduce eleven new stock futures and stock options contracts on 27 August (Monday). The moves are designed to strengthen the HKEx Derivatives Market by aligning the stock futures and stock options markets more closely, and giving investors more choices.

The stock futures market changes include standardising the contract specifications and adopting the stock options markets capital adjustment methodologies. (A list of the changes and the new contract specifications are attached.)

After the markets close on 24 August (Friday), the contract multipliers of the existing stock futures contracts will be changed to one board lot size of their underlying shares, the same as the contract size for stock options, and the number of outstanding contracts recorded by the HKFE Clearing Corporation Limited, a wholly-owned member of the HKEx Group, will be adjusted accordingly.

The eleven new stock futures and stock options contracts will be based on the share prices of Cathay Pacific Airways Limited, Cheung Kong Infrastructure Holdings Limited, China Merchants Holdings (International) Limited, China Unicom Limited, Cosco Pacific Limited, The Hong Kong and China Gas Company Limited, Hong Kong Exchanges and Clearing Limited, Johnson Electric Holdings Limited, Li & Fung Limited, MTR Corporation Limited, and PetroChina Company Limited. HKEx will offer 31 stock options contracts and 30 stock futures contracts following the introduction of the eleven new contracts.

Stock Futures Market Changes

A.   Contract specifications for stock futures contracts

The Contract specifications of stock futures contracts will be redesigned as follows:

1. The contract specifications of individual stock futures contracts will be standardised;

2. The contract multipliers of stock futures contracts will be changed to one board lot size of their underlying shares as defined by the Stock Exchange of Hong Kong;

3. The number of contract months of Stock Futures available for trading be increased from four (spot month, next calendar month and two quarter months) to five (spot month, next two calendar months and two quarter months);

4. The position limit of all Stock Futures contracts will be changed to 5,000 gross contracts;

5. The Large Open Positions of all Stock Futures contracts will be changed to 1,000 gross contracts;

6. The Exchange Fee will be reduced from HK$10 to HK$3.50.

7. The minimum commission rates for all stock futures contracts with minimum commission will be reduced from HK$100 (over-night trade) and HK$60 (day-trade) to HK$20 (over-night trade) and HK$12 (day-trade). There will be no change to contracts with negotiable commission rate. (Note: All commissions will be negotiable from 1 April 2002.)

B.    Regulations for Trading Stock Futures Contracts

The capital adjustment methodologies of Stock Options markets will be adopted and the new capital adjustment procedures will be incorporated into the Stock Futures Regulations.

C.   Trading Procedures for Stock Futures Traded on HKATS, Hong Kong Futures Automated Trading System

The obligations and arrangement for Registered Traders will be amended as follows:

1. Registered Trader shall make bids and offers for a minimum of ten contracts instead of two contracts.

2. Registered Trader will be entitled to pay reduced Exchange fees of HK$0.50 per Stock Futures Contract instead of HK$2.00.

CONTRACT SPECIFICATIONS FOR STOCK FUTURES CONTRACTS

Contract Multiplier	Board lot size of the underlying shares
Contracted Price	An amount in HK$ established through HKATS in accordance with the Rules of the Exchange, and which is registered by the Clearing House
Contracted Value	Contracted Price multiplied by Contract Multiplier
Minimum Fluctuation	HK$0.01
Contract Months	Spot Month, the next two calendar months, and the next two calendar quarter months (i.e. quarterly months are March, June, September and December)
Adjustments	Adjustments will be made to the Contract Multiplier and the Contracted Price to reflect events such as dividends, share splits, bonus and rights issues, etc. in accordance with the Regulations for Trading Stock Futures Contracts. For special events such as distribution in specie, offering of shares in another company, bonus warrants, change of domicile etc., the Chief Executive, in consultation with the Commission, will have the ultimate authority to make an Adjustment where he deems an Adjustment to be appropriate. The Adjustments shall be final and binding.
Trading Hours	Two Trading Sessions per day: 10:00 a.m. - 12:30 p.m. and 2:30 p.m. - 4:00 p.m.* (Hong Kong time) (*Trading hours shall be adjusted automatically to correspond with trading hours in the underlying cash market, as they may be set from time to time.)
Trading Hours on Last Trading Day	Same as above
Last Trading Day	The Business Day immediately preceding the last Business Day of the Contract Month
Cash Settlement Value	Final Settlement Price multiplied by Contract Multiplier
Final Settlement Day	The first Business Day after the Last Trading Day
Final Settlement Price	The Final Settlement Price shall be the average of the midpoints of the best bid and best ask prices for the underlying common share as quoted in the cash market taken at five-minute intervals during the Last Trading Day as provided in Regulation 012 and subject to Regulation 013
Settlement Method	Cash settled contract of difference
Position Limits	5,000 gross contracts, in any one Contract Month, per Exchange Participant for the Exchange Participant's own account; and 5,000 gross contracts, in any one Contract Month, per Client
Large Open Position	1,000 gross contracts, in any one Contract Month, per Exchange Participant for the Exchange Participant's own account; and 1,000 gross contracts, in any one Contract Month, per Client
Trading Fees##
Exchange Fee SFC Levy Compensation Fund Levy Total	HK$3.50 per contract per side HK$1.00 per contract per side HK$0.50 per contract per side =HK$5.00 per contract per side
Commission Rate	Before 1 April 2002 Minimum Commission Rate HK$20 per contract per side (overnight); or HK$12 per contract per side (day-trade) in respect of (i) Cheung Kong (Holdings) Limited Futures Contract; (ii) China Mobile (Hong Kong) Limited Futures Contract; (iii) China Resources Enterprise, Limited Futures Contract; (iv) CITIC Pacific Limited Futures Contract; (v) CLP Holdings Limited Futures Contract; (vi) Hang Seng Bank Limited Futures Contract; (vii) Henderson Land Development Company Limited Futures Contract; (viii) Hongkong Electric Holdings Limited Futures Contract; (ix) Hopewell Holdings Limited Futures Contract; (x) HSBC Holdings Plc. Futures Contract; (xi) Hutchison Whampoa Limited Futures Contract; (xii) New World Development Company Limited Futures Contract; (xiii) Shanghai Industrial Holdings Limited Futures Contract; (xiv) Sun Hung Kai Properties Limited Futures Contract; (xv) Swire Pacific Limited A Futures Contract; and (xvi) The Wharf (Holdings) Limited Futures Contract. The Minimum Commission Rate for the other Stock Futures Contracts is negotiable. On or after 1 April 2002 Negotiable for all Stock Futures Contracts

## These fees are subject to change and investors should consult their brokers

LIST OF UNDERLYING STOCKS FOR STOCK FUTURES AND STOCK OPTIONS CONTRACTS

1. Bank of East Asia Limited
2. Cathay Pacific Airways Limited
3. Cheung Kong (Holdings) Limited
4. Cheung Kong Infrastructure Holdings Limited
5. China Merchants Holdings (International) Company Limited
6. China Mobile (Hong Kong) Limited
7. China Resources Enterprise, Limited
8. China Unicom Limited
9. CITIC Pacific Limited
10. CLP Holdings Limited
11. Cosco Pacific Limited
12. Hang Seng Bank Limited
13. Henderson Land Development Company Limited
14. Hong Kong and China Gas Company Limited
15. Hong Kong Exchanges and Clearing Limited
16. Hongkong Electric Holdings Limited
17. Hopewell Holdings Limited
18. HSBC Holdings Plc.
19. Hutchison Whampoa Limited
20. Johnson Electric Holdings Limited
21. Legend Holdings Limited
22. Li & Fung Limited
23. MTR Corporation Limited
24. New World Development Company Limited
25. Pacific Century CyberWorks Limited
26. PetroChina Company Limited
27. Shanghai Industrial Holdings Limited
28. Sun Hung Kai Properties Limited
29. Swire Pacific Limited A
30. Tracker Fund of Hong Kong *
31. Wharf (Holdings) Limited

* Stock Options only