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Market Makers

ETP Stamp 2020_Effective_web banner

HKEX recognises that market makers play an important role in the Exchange Traded Product (ETP) market. Authorised market makers contribute to Hong Kong’s market quality by providing improved liquidity and price efficiency, enabling investors to trade in a timely manner and at a lower transaction cost.

HKEX offers robust trading facilities and a competitive market maker programme that supports our exchange to be Asia’s ETP hub.

FUNDED JUMBO IPOS
COMPETITIVE INCENTIVE SCHEME

Market makers receive both financial and non-financial benefits for providing market liquidity

access
TRADING INFRASTRUCTURE

HKEX robust trading facilities - including a state-of-the-art Tier 4 data centre - allows market makers to trade faster and smarter

Asia
ASIA'S ETP HUB

HKEX is one of the leading ETP markets in Asia in terms of the number of listings, turnover and asset under management (AUM)

partner
CHINA CONNECTION

HKEX is reshaping the global market landscape by connecting Mainland China with the rest of the world

Trading Fee Waivers for Market Maker Transactions in ETPs

Starting from 31 May 2021, new trading fee waiver rates will be applied to different ETF categories for market maker transactions, applicable to both Securities Market Makers and Designated Specialists, as set out below:

 

  1. Trading fee waiver in relation to market maker transactions on ETFs that invest into domestic equity securities,with trailing 12-month average daily turnover (ADT) not less than HK$300 million will be 25%

  2. Trading fee waiver in relation to market maker transactions on ETFs that invest into non-domestic equity securities and L&I Products, with trailing 12-month ADT not less than HK$300 million will be 75%.

  3. Trading fee waiver in relation to market maker transactions on other ETPs will be 100%.

 

Please refer to Exchange Circular Ref No. ETP/001/21. The list of ETPs and the applicable rate of trading fee exemption are also available on HKEX website and will be reviewed on a quarterly basis and updated accordingly.

Updated 14 Sep 2021

Learn more about Securities Market Maker and Designated Specialist

Securities Market Makers (SMMs) and Designated Specialists (DSs), collectively called market makers provide liquidity to Hong Kong ETP market.

Here are the details of SMM and DS:

Securities Market Maker (SMM) Designated Specialist (DS)
Product scope All ETP counters (Exchange Traded Funds and Leveraged and Inverse Products)
Eligibility

Exchange Participants (EP) of SEHK that demonstrate that it is suitably qualified in terms of financial standing, risk management, trading record, computer equipment and internal security procedures as stipulated in Explanatory Note EN10*

 

If SMM holds market making positions in accounts of an affiliate, the affiliate has to fulfil one of the below criteria:            

  • A regulated entity is one regulated by an exchange, clearing house, independent authority or commission which is acceptable to HKEX;
  • The affiliate must have and must maintain a current credit rating of A- or above (Standard & Poor’s) or A3 or above (Moody's);           
  • The paid-up capital of the entity must be at least equal to the equivalent of HK$50,000,000 and its shareholders' funds must be at least the equivalent of HK$100,000,000 at all times.         

Clients of EPs that satisfy one of the below criteria:

  1. licensed by or registered with the SFC for Type 1 or Type 2 regulated activities under the Securities and Futures Ordinance, or licensed, registered for similar activity by an overseas authority having a memorandum of understanding with the SFC for the sharing of market surveillance information
  2. licensed bank regulated by an authority acceptable to SEHK
  3. maintained a current long-term credit rating of A- or above (Standard & Poor’s) or A3 or above (Moody's)
  4. maintained a paid-up capital of at least HK$50,000,000 and shareholders' funds of at least HK$100,000,000

Point to note:

  • An EP can register one or more DS for an ETP counter
  • A DS can be registered by more than one EP only for different ETP counters
  • An EP may apply to make market on the same ETP counter as its registered DS
How to apply/register?

EP should submit application form (Form 10), internal report and documentary evidence showing its affiliate satisfying relevant requirements (if applicable)

Download Application Form 10

Download Explanatory Note 10

EP should submit application form (Form 10A) and internal report as stipulated in Explanatory Note EN10A to register for its DS

Download Application Form 10A

Download Explanatory Note 10A

Market making device

EP can apply for a Market Making Orion Central Gateway (MMOCG) session at a discounted rate for market making of ETPs for itself and for each of its DS.

Download Application Form

Download Explanatory Note

Market making arrangement

Market makers receive incentives and are subject to market making obligations.

Download Market Making Arrangement  

Please note obligations of DS are monitored based on unique broker number.

Market making obligations, market making trading fee exemption rate and spread table

Market Making Obligations, Market Making Trading Fee Exemption Rate, and the Spread Table of each ETP can be found below.

Download Market Making Obligation, Market Making Trading Fee Exemption Rate, and Spread Table (.xlsx format)

Download Market Making Obligation, Market Making Trading Fee Exemption Rate, and Spread Table (.csv format)           

Stamp duty waiver for market makers

SMMs and DSs can apply for waiving the stamp duty on stock transfers in the course of creating and redeeming ETP units listed in Hong Kong.

For details of the operations, please refer to Explanatory Note 10 / 10A. Relevant documents can be found here.

Buy-in Exemption for market makers SMMs and DSs can apply through their Clearing Participants no later than 20:00 HKT on standard settlement date (T+2) for a one-day buy-in exemption on short positions that resulted from market making activities.

For details, please refer to CCASS Operational Procedures Section 10.8.3 and 10.8.4. The application form can be found here.  

For more information about becoming a market maker for an ETP listed on HKEX and our market making programme, please refer to our infosheet or email ETFs@hkex.com.hk or LIProducts@hkex.com.hk.

Updated 14 Sep 2021