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Hang Seng China Enterprises Index Futures Options

Hang Seng China Enterprises Index Futures Options

Introduction

Hang Seng China Enterprises Index (HSCEI) Futures Options are designed for global investors to execute derivative trading strategies on Hong Kong equity. The contracts complement HKEX’s HSCEI derivatives suite enabling investors to trade and hedge with great flexibility.

Hang Seng China Enterprises Index

The benchmark of China companies listed in Hong Kong

HKEX’s HSCEI Index Futures Options are effective trading and risk management tools for investors wishing to gain or manage exposure to Mainland China companies listed in Hong Kong amid the growing interest in Mainland-related equities.

Comprehensive product ecosystem

HSCEI is used as the base index for a wide variety of derivatives products. HSCEI futures (introduced in December 2003) and options (introduced in June 2004) have become very popular with increasing domestic and international investors’ participation. Together with Flexible HSCEI Options, Weekly HSCEI Options, and Mini- HSCEI Futures and Options, these contracts provide investors with a set of effective instruments to manage risks in Hong Kong-listed Chinese companies.

Related Circulars:

Introduction of Physically Settled Options Contracts on Hang Seng Index Futures and Hang Seng China Enterprises Index Futures
Introduction of Physically Settled Options Contracts on Hang Seng Index Futures and Hang Seng China Enterprises Index Futures on 23 August 2021
Frequently Asked Questions – Position Limits and Large Open Position (“LOP”) Reporting on Physically Settled Options on Futures Contracts
Appointment of Primary Market Makers and Finalised Trading Arrangements for Physically Settled Option Contracts on Hang Seng Index Futures and Hang Seng China Enterprises Index Futures

Press release

Derivatives Market Access Codes

NOTICE:

Participants should ensure the following before engaging in trading or offering Options on Futures products to clients:

  • Ensure systems (including front office and back office systems) and operational readiness nd complete a Readiness Test successfully in the HKEX testing environment.
  • Necessary measures taken to ensure the end users/clients understand the settlement mechanism and risk involved in the new product (e.g. Client-facing staff / clear client interface and client education).
  • Thorough and effective communication made to the clients prior to offering, specifically, on the differences between Options on Index and Options on Futures products.
  • Similar to all physically-settled options, an option position holder should be aware that the final P&L of such position would be affected by the price of the underlying asset.
  • There may be cases where the delivered position will incur immediate mark-to-market gain/loss (the price of delivered position may not be the same as official settlement price).
  • Participants who do not wish positions to settle into futures could opt to square their positions before expiry or consider the cash-settled Options on Index.
  •  Participants should closely monitor and manage their risk at all times.

 


Updated 23 Aug 2021


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Contract Summary

Hang Seng China Enterprises Index Options 

 

Item  
Underlying Index                Hang Seng China Enterprises Index Futures
HKATS Code  PHH
Contract Multiplier  HK$50 per index point
Minimum Fluctuation  One index point. 
Contract Months    Short-dated Options:-
Spot, next three calendar months & next three calendar quarter months

Long-dated Options:-
the next three months of June & December and the following 3 December months
Exercise Style European Style
Option Premium Quoted in whole index points. The option premium is not paid up front but marked
to market on daily 
basis. During the life of the OOF (including initiation and the
exercise/expiry day), the buyer pays
(receives) any decrease (increase) in the option’s
premium as a variation margin.
 Strike Prices
 Index Points Strike Interval 
 Short-dated Options:
 ≥ 20,000  200
 ≥ 5,000 and < 20,000  100
 < 5,000  50
 Long-dated Options:
 ≥ 20,000  400
  ≥ 5,000 and < 20,000  200
  < 5,000  100
 
Trading Hours 

9:15 am - 12:00 noon, 1:00 pm - 4:30 pm & 5:15 pm  - 3:00 am
(Expiring contract month closes at 4:00 pm on the Expiry Day)                 

Expiry Day  The third Friday of the Contract Month and if it is not a business day, the Expiry Day shall be the preceding business day
Settlement on Exercise Physical Delivery on Exercise.  All in-the-money options are automatically exercised upon expiry.
Official Settlement Price The Official Settlement Price for HSCEIF Options shall be a number, rounded down to the nearest whole number, determined by the Clearing House and shall be the average of the quotations of the HSCEIF Contract of the same Contract Month, taken at five (5) minute intervals from 9:30 a.m. – 12:00 noon and 1:00 p.m.– 4:00 p.m. on the Expiry Day of the HSCEIF Options.
Transaction Costs   Exchange Fee                HK$3.50
Commission Levy         HK$0.54
Commission Rate          Negotiable

Please visit “Rules, Regulations and Procedures of the Futures Exchange” of “Trading Rules” under “Rules and Regulations” of the HKEx website for full contract specifications.


Margin Table

Trading Fees and Commission

Hang Seng Index Options on Futures
Exchange Fee HK$3.5 Per contract per side
Commission Levy HK$0.54 per contract per side
Total HK$4.04 per contract per side
Commission Negotiable

Updated 20 Aug 2021

Market Making/Liquidity providing obligations and Incentives

For details of the Market Making/Liquidity Providing Obligations and Incentives of Equity Index Products, please refer our webpage below:

https://www.hkex.com.hk/Products/Listed-Derivatives/Market-Maker-Program/Market-Maker-Obligations-and-Incentives?sc_lang=en