Hong Kong Exchanges and Clearing Limited (HKEx) will introduce H-shares Index Options, four additional stock options and four additional stock futures for trading in its derivatives market on Monday, 14 June 2004.
H-shares Index Options are being introduced to complement H-shares Index Futures and provide an additional trading and hedging tool for investors who are interested in H shares (Hong Kong-listed shares in companies incorporated on the Mainland). The new options will join the wide range of products offered by HKEx to meet the needs of investors interested in China-related securities and derivatives.
The underlying index for H-shares Index Options is the Hang Seng China Enterprises Index (HSCEI). The HSCEI is a market capitalisation-weighted stock index compiled by HSI Services Limited. The index currently comprises 37 Main Board-listed H shares that had a combined market capitalisation of about $309 billion as of 30 April 2004.
The Contract Multiplier for H-shares Index Options will be $50 and there will be six Contract Months available for trading: spot month, next two calendar months and next three calendar quarter months (the calendar quarter months are March, June, September and December). At the launch, the Contract Months will be June, July, August, September and December 2004 and March 2005.
Fortis Clearing (Futures) Hong Kong, Phillip Commodities (H.K) and UBS Derivatives Hong Kong have signed up to serve as market makers for H-shares Index Options, supplying bid and ask quotes to help provide trading liquidity and market depth for investors. HKEx will continue seeking to sign up more market makers for the new product.
In parallel with the introduction of the H-shares Index Options, HKEx is rolling out four additional stock options and four additional stock futures in its derivatives market. The additions comprise China Petroleum & Chemical Corp (Sinopec) Options and Futures, China Life Insurance Co Options and Futures, China Telecom Corp Options and Futures and Aluminum Corp of <st1:country-region>China</st1:country-region> (Chalco) Options and Futures. All four are H-share companies.
The additional stock options and stock futures are being introduced to provide trading and hedging instruments for more individual H shares as the sector continues to attract strong market interest. They will complement trading in H-shares Futures and Options while providing more choices for investors interested in individual stock options and futures (from 14 June 2004, HKEx will offer 37 stock options and 36 stock futures).
KBC Financial Products Trading Hong Kong, Macquarie Equities (Asia), Morgan Stanley Dean Witter Hong Kong Securities and Timber Hill Securities Hong Kong have signed up as market makers for the additional stock options, and Timber Hill will serve as market maker for the additional stock futures. HKEx will continue seeking to sign up more market makers for the new contracts.
"Market participants have expressed interest in H-shares Index Options since we introduced our H-shares Index Futures contract in December last year," said HKEx chief operating officer Patrick Conroy. "We have been very pleased with the market response to H-shares Index Futures - they have been among our five most actively traded products each month since their introduction - and we believe that the prospects for H-shares Index Options are very good. However, HKEx always takes a long-term view when introducing any new financial product. New products often take some time to develop. We do not have any specific volume or open interest targets for contracts we will be introducing on the 14 June.
"The introduction of the additional stock options and stock futures will further expand our range of China-related products and provide investors with a wider range of meaningful choices," Mr Conroy added.
The latest information on futures and options traded on HKEx's markets, including contract specifications and information vendor codes, is available on the HKEx website (http://www.hkex.com.hk) and the H-shares Index Options product booklet will be posted on the HKEx website. The latest information on the H-shares Index is available on the HSI Services website (http://www.hsi.com.hk).
List of Stock Futures