Hong Kong Exchanges and Clearing Limited (HKEx) announced today new measures to further develop its Stock Options market, which set new records last year for volume (5,611,832 contracts, up 33 per cent from 2003) and open interest (979,659 contracts on 29 December). The measures take effect on 1 February this year and comprise the following.
Continuous Quotations in Selected Stock Options Classes
Two market makers, Timber Hill Securities Hong Kong and UBS Securities Hong Kong, will provide continuous quotations for not less than 30 contracts and 60 contracts in Tier 1 and Tier 2 Stock Options classes respectively (please see attached a list of all Stock Options and their respective tiers). In addition, the two firms will provide continuous quotations for not less than 12 assigned series in the following eight Stock Options classes:
Tier 1: HSBC Holdings, Sun Hung Kai Properties, Hutchison Whampoa, China Mobile (Hong Kong) and Cheung Kong (Holdings)
Tier 2: BOC Hong Kong (Holdings), PetroChina and China Life Insurance
Existing market makers' obligations will not be affected by these changes.
Reduced Tariffs for Tier 1 Stock Options Classes
- Tariffs will be reduced 40 per cent (from $5 to $3).
Narrower Strike Intervals in Selected Stock Options Classes
- Options on China Mobile (Hong Kong) will be added to Interval Group B, which now includes options on HSBC Holdings, Hang Seng Bank, Sun Hung Kai Properties, Hutchison Whampoa, Cheung Kong (Holdings) and Tracker Fund of Hong Kong.
- Interval Group B will be applied to all five expiry months for the Stock Options classes listed above. Interval Group B only applies now to the spot month and spot next expiry month.
- Strike intervals for options on stocks in Interval Group B which are priced between $100 and $200 will be narrowed by 50 per cent (from $5 to $2.50).
Under these new arrangements, about 400 new Stock Options series will be added and a total of more than 3,000 series will be available for trading.
"These measures will give market participants more choice and further strengthen our Stock Options market," Gerald Greiner, HKEx's Deputy Chief Operating Officer, said.
Stock Options Classes