The Callable Bull/Bear Contracts (CBBCs) market of Hong Kong Exchanges and Clearing Limited (HKEx) has grown steadily since its launch on 12 June 2006.
Average daily turnover increased from below $100 million in the first 12 months to $1.4 billion in the first quarter of 2008 (see chart 1 below). Meanwhile, the number of newly listed CBBCs has surged, rising from 29 in the third quarter of 2006, the market’s first full quarter, to 323 in the most recent quarter (see chart 2 below).
Chart 1
Chart 2
HKEx continues to work closely with the Securities and Futures Commission and issuers on broadening the range of underlying assets for CBBCs. A breakdown of the CBBC listings by their underlying assets shows a trend towards instruments with exposure to single stocks (see table below).
To support further growth of the CBBC market, HKEx will introduce enhancements to the following two aspects.
New Format for CBBC Chinese Short Names
According to market feedback, the CBBC Chinese short names may not be easily distinguishable from the Derivative Warrant (DW) short names. Therefore, HKEx has decided to modify the format of CBBC Chinese short names, as explained in the attached note, for investors to easily differentiate CBBCs from DWs and to determine whether a CBBC is a bull contract or a bear contract. The new format will be used for all CBBCs listed on or after 13 May 2008.
Stock Code Ranges for CBBCs
A number of additional stock code ranges have been recently designated to CBBCs. Investors are advised to check the stock code allocation plan posted on HKEx’s website (at http://www.hkex.com.hk/eng/newsconsul/hkexnews/2008/documents/scap.pdf) from time to time to stay informed of any updates to the plan.
"The growth we have seen on CBBCs has been very encouraging," said HKEx's Head of Cash Market Eric Yip. "The implementation of the new format of CBBC Chinese short names will allow investors to more easily identify the key features of a CBBC and to avoid confusion with other structured products such as derivative warrants. We will also continue to assign new stock code ranges for CBBCs in order to support further new listings of CBBCs. HKEx will continue to enhance the market infrastructure for CBBCs based on market needs."
The Existing and New Formats of CBBC Chinese Short Names are attached to this news release.