• Four most actively traded equity index options at HKEX to be included in derivatives market’s T+1 Session (after hours trading) in second quarter of 2018, subject to regulatory approval
• Average daily volume in new extended T+1 period (11:45 pm to 1 am) was over 10,000 contracts in early 2018, with a one day high of 21,070 contracts
• Equity index futures volume in T+1 Session was record high 184,397 contracts on 6 February 2018

Hong Kong Exchanges and Clearing Limited (HKEX) is proceeding with its plan to include its most actively traded equity index options - Hang Seng Index (HSI) Options, Hang Seng China Enterprises Index Options (HSCEI) Options, Mini-HSI Options and Mini- HSCEI Options (equity index options) -  in the T+1 Session (after hours trading) of its derivatives (futures and options) market.  The changes will be made after a readiness test scheduled for the early second quarter of this year and the final regulatory approval.  They are expected to be introduced before the end of the second quarter.  The effective date will be announced later.

HKEX introduced its first after hours trading enhancement on 6 November 2017, when it extended after hours trading of its four most actively traded equity index futures contracts by moving the T+1 Session close from 11:45 pm to 1 am the following day.

Since the rollout of the enhancement, the total after hours trading volume of equity index futures has increased 80 per cent compared to volume before the extension¹.  In the three months to early February of this year, their average daily volume (ADV) in after hours trading was 49,502 contracts, the highest for the period since the introduction of the T+1 Session², and volume was a record high 184,397 contracts on 6 February 2018.  ADV in the new extended T+1 period was over 10,000 contracts in early 2018, with a one day high of 21,070 contracts, and after hours trading has accounted for 13.5 per cent of total equity index futures trading in the past three months, compared with 10.3 per cent prior to the extension.

Moreover, more than 96 per cent of Exchange Participants (135 out of 140) trading equity index futures in the T+1 Session have traded them between 11:45 pm to 1 am, and the extended period has accounted for as much as 29 per cent of the total T+1 Session volume.

“The positive market feedback for our phase one enhancements proved market demand for equity index products in the T+1 Session.” said Roger Lee, HKEX’s Joint Chief Operating Officer and Head of Markets. “To further enhance the infrastructure in the T+1 Session, subject to regulatory approval, we will include equity index options from the second quarter to provide more comprehensive trading and risk management tools to the market, and we will work closely with market participants and regulators to ensure we continue to have smooth operations and orderly trading in the T+1 Session.”

Inclusion of equity index options and a trading halt mechanism which is only applicable to options in the T+1 Session is the second phase of HKEX’s after hours trading enhancement plan. The third phase, also subject to regulatory approval, comprises trading of selected products from 1:00 am to 3:00 am of a further extended T+1 Session and adjustment of the T+1 Session Cutoff Time (the deadline for system input of post-trade information after the T+1 Session) to reflect the session’s new closing time.

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