Hong Kong Exchanges and Clearing Limited (HKEx) plans to introduce Hang Seng China H-Financials Index (HFI) futures on 16 April this year, pending Securities and Futures Commission approval. HKEx will also introduce additional stock option classes and stock futures contracts on 19 March and discontinue trading in Lenovo Group Ltd (Lenovo; stock code 992) options and futures.
HFI Futures and the HFI
HFI futures will be a trading and hedging tool specific to Mainland financial stocks listed on the Stock Exchange’s Main Board. The new futures will join a broad range of products offered by HKEx to meet the needs of investors interested in Mainland China-related securities and derivatives.
Key HFI Futures Contract Specifications
Please see the attachments for additional contract information.
The HFI is a free float-adjusted, market capitalisation-weighted index with a 15 per cent cap on each constituent’s weighting. It is compiled by HSI Services Limited and tracks the performance of major Mainland financial stocks in the H-shares universe. The index currently has eight constituents: five major banks and three large insurance companies (the constituents and their weightings in the index are in the attachments). At the end of last year, the market capitalisation of the HFI’s constituents accounted for more than 18 per cent of Main Board equities’ total market capitalisation. In addition, HFI stocks accounted for nearly 24 per cent of Main Board equities’ turnover in December last year. Additional information on the HFI is in the attachments.
Additional Stock Option Classes and Stock Futures Contracts
HKEx will introduce options and futures on China Communications Construction Co Ltd (stock code 1800), Foxconn International Holdings Ltd (stock code 2038) and PICC Property and Casualty Co Ltd (stock code 2328) on 19 March. Contract highlights are in the attachments and contract summaries are on the HKEx website at:
http://www.hkex.com.hk/eng/prod/drprod/so/conspec.htm (stock options) and
http://www.hkex.com.hk/eng/prod/drprod/sf/conspec_sf.htm (stock futures)
Discontinuing trading in Lenovo Options and Futures
Trading of Lenovo options and futures will be gradually discontinued from 12 March. After the market close on 12 March, no new expiry months, series or contract months will be introduced, and all existing expiry months, series and contracts months will be available for trading until the expiration of the respective expiry months and contract months.
"There is strong investor interest in H shares and the financial companies in the H-shares index and requests have come from the market for a futures contract on the HFI. We think this is a good time to give investors more choice by introducing HFI futures," said HKEx Chief Operating Officer Gerald Greiner. "HKEx always takes a long-term view when introducing new products, which often take time to develop, so we do not have any specific volume or open interest targets for HFI futures.
"The introduction of the additional stock option classes and stock futures contracts will further expand our range of Mainland China-related products and give market participants a broader range of futures and options for hedging and trading," Mr Greiner added.
The latest information on futures and options traded on HKEx's markets, including contract summaries and information vendor codes, is available on the HKEx website at: http://www.hkex.com.hk/eng/prod/drprod/dmproducts.htm. The latest information on the HFI is available on the HSI Services Limited website (http://www.hsi.com.hk).
ATTACHMENTS
HFI Constituents and Weightings (As of 13 February 2007)
* One of the 10 Hong Kong-listed companies with the highest share turnover value in 2006.
Contract Specifications for Hang Seng China H-Financials Index Futures
(Subject to SFC Approval)
| Contract Multiplier |
$50 per Index point |
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| Contract Months |
Spot Month, the next calendar month, and the next two calendar quarter months (ie quarterly months are March, June, September, and December) |
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| Minimum Fluctuation |
One Index point |
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| Maximum Fluctuation |
Nil |
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| Contracted Price |
The price in whole Index points at which a Hang Seng China H-Financials Index Futures Contract is registered by the Clearing House |
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| Contracted Value |
Contracted Price multiplied by the Contract Multiplier |
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| Position Limits |
Position delta for Hang Seng China H-Financials Index Futures of 10,000 long or short in all Contract Months combined |
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| Large Open Positions |
500 open contracts, in any one Contract Month, per Exchange Participant for the Exchange Participant’s own behalf; and |
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500 open contracts, in any one Contract Month, per Client |
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| Trading Hours |
9:45 am - 12:30 pm and
2:30 pm - 4:15 pm (Hong Kong time) |
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| Trading Hours on Last Trading Day |
9:45 am - 12:30 pm and
2:30 pm - 4:00 pm# (Hong Kong time) |
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# The closing time shall be adjusted automatically to correspond with the closing time of the underlying cash market, as it may be set from time to time |
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| Trading Method |
The Exchange’s* Automated Trading System (HKATS) |
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| Final Settlement Day |
The first Business Day after the Last Trading Day |
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| Settlement Method |
Cash settled contract for differences |
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| Last Trading Day |
The Business Day immediately preceding the last Business Day of the Contract Month |
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| Final Settlement Price |
The Final Settlement Price for Hang Seng China H-Financials Index Futures Contracts shall be a number, rounded down to the nearest whole number, determined by the Clearing House and shall be the average of quotations of the Hang Seng China H-Financials Index taken at five minute intervals during the Last Trading Day and compiled, computed and disseminated by HSI Services Ltd. The Chief Executive of the Exchange has the power under the Regulations for trading Stock Index Futures Contracts to determine the Final Settlement Price under certain circumstances. |
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| Trading Fee |
Exchange Fee |
$5.00 |
| (per contract per side) |
The amount indicated above is subject to change from time to time. |
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Levies
(per contract per side) |
Commission Levy
Investor Compensation Levy |
$0.80
$0.50 |
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Commission Levy and Investor Compensation Levy are payable at the rate or of the amount prescribed from time to time pursuant to the Ordinance. The amounts indicated above are for reference only and are subject to change as prescribed pursuant to the Ordinance. No Investor Compensation Levy shall be payable for as long as an exemption notice published under section 25 of the Securities and Futures (Investor Compensation –Levy) Rules is in force. Exchange Participants will be notified accordingly of the exemption notice (and its termination). |
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| Commission Rate |
Negotiable |
* The Exchange refers to Hong Kong Futures Exchange, a wholly-owned subsidiary of HKEx.
Key Contract Specifications for Additional Stock Option Classes