Issuer contact and information¹

Please note that the creditworthiness of the issuer and its guarantor, among other things should be considered carefully before dealing in structured products.  Details of the risk factors and credit ratings can be found in the issuers' listing documents published on the HKEXnews website. 

Notes

1. Information in the table above is provided by issuers, the Exchange does not verify the accuracy of the information in the table.
2. If the structured product is a guaranteed issue, the rating shown is for the guarantor. The information will generally be updated after market close when there is a change of credit rating notified by the issuer.  Users should refer to real-time information services for the latest ratings. 
3. Total shareholders’ equity represents the aggregate of share capital and reserves attributable to the equity holders of the issuer or the guarantor (in the case of guaranteed issue) per their latest annual/interim financial statements and converted into HKD by using the relevant exchange rate as of financial period end date. The information will be updated as soon as practicable upon receipt of information from the issuer.  Users should refer to the most recent publication of annual/interim financial statements published on the HKEXnews website for the latest financial position.
4. These issuers have a credit rating which is one of the top three investment grades awarded by a credit rating agency recognized by the Exchange in accordance with the Main Board Listing Rule 15A.13(1).
5. These issuers rely on compliance with other regulatory requirements (i.e. regulated by the Hong Kong Monetary Authority, the Securities and Futures Commission or an overseas regulatory authority acceptable to the Exchange) in accordance with the Main Board Listing Rule 15A.13(2) & (3). 

Derivative Warrants

CBBCs

Inline Warrants

Industry Principles on Liquidity Provision for Listed Structured Products

1. Issuer default risk
In the event that a structured product issuer becomes insolvent and defaults on their listed securities, investors will be considered as unsecured creditors and will have no preferential claims to any assets held by the issuer. Investors should therefore pay close attention to the financial strength and credit worthiness of structured product issuers.

Note: “Issuers Credit Rating” showing the credit ratings of individual issuers is now available under the Issuer and Liquidity Provider Information sub-section under Derivative Warrants section, under CBBCs section and under Inline Warrants section on the HKEX market website.

2. Uncollateralised product risk
Uncollateralised structured products are not asset backed. In the event of issuer bankruptcy, investors can lose their entire investment. Investors should read the listing documents to determine if a product is uncollateralised.

3. Gearing risk
Derivative warrants and callable bull/bear contracts (CBBCs) are leveraged and can change in value rapidly according to the gearing ratio relative to the underlying assets. Investors should be aware that their value may fall to zero resulting in a total loss of the initial investment. 
The level of gearing embedded in an inline warrant depends on a variety of factors including but not limited to time-to-expiry and spot price of the underlying asset compared to the lower and upper strike prices. An inline warrant will be expected to have a high effective gearing when trading price close to the lower or upper strike price, and a relatively low effective gearing in other cases. These differences in effective gearing are amplified when inline warrants are close to expiry.

4. Expiry considerations
Structured products have an expiry date after which the issue may become worthless. Investors should be aware of the expiry time horizon and choose a product with an appropriate lifespan for their trading strategy.

5. Extraordinary price movements
The price of a structured product may not match its theoretical price due to outside influences such as market supply and demand factors. As a result, actual traded prices can be higher or lower than the theoretical price.

6. Foreign exchange risk
Investors trading structured products with underlying assets not denominated in Hong Kong dollars are also exposed to exchange rate risk. Currency rate fluctuations can adversely affect the underlying asset value, also affecting the structured product price.

7. Liquidity risk
The Exchange requires all structured product issuers to appoint a liquidity provider for each individual issue. The role of liquidity providers is to provide two way quotes to facilitate trading of their products. In the event that a liquidity provider defaults or ceases to fulfill its role, investors may not be able to buy or sell the product until a new liquidity provider has been assigned.

1. Mandatory call risk
Investors trading CBBCs should be aware of their intraday “knockout” or mandatory call feature. A CBBC will cease trading when the underlying asset value equals the mandatory call price/level as stated in the listing documents. Investors will only be entitled to the residual value of the terminated CBBC as calculated by the product issuer in accordance with the listing documents. Investors should also note that the residual value can be zero.

2. Funding costs
The issue price of a CBBC includes funding costs. Funding costs are gradually reduced over time as the CBBC moves towards expiry. The longer the duration of the CBBC, the higher the total funding costs. In the event that a CBBC is called, investors will lose the funding costs for the entire lifespan of the CBBC. The formula for calculating the funding costs are stated in the listing documents.

1. Time decay risk
All things being equal, the value of a derivative warrant will decay over time as it approaches its expiry date. Derivative warrants should therefore not be viewed as long term investments.

2. Volatility risk
Prices of derivative warrants can increase or decrease in line with the implied volatility of underlying asset price. Investors should be aware of the underlying asset volatility.

1. Pricing structure
The pricing structure of the inline warrants requires investors to assess accurately the value of the inline warrants in relation to the expected probability of the valuation of underlying asset falling within the range between the upper strike price and the lower strike price (both inclusive).  It may be difficult for investors to properly value and/or to use as a hedging tool.

2. Maximum potential payoff is capped
If the valuation of underlying asset falls within or at the price range between the lower strike price and the upper strike price (both inclusive), investors will only receive a maximum payoff of HK$1 per inline warrant at expiry. Therefore, the potential payoff is capped.

3. Cancellation of trade above HK$1
Due to the pre-determined fixed maximum payment at expiry of HK$1, an inline warrant should not be traded above HK$1. Any trades executed at the price above HK$1 shall not be recognized and will be cancelled by the Exchange.

Investors should be aware that certain trading strategies adopted by market participants (as mentioned below) can result in heightened turnover, price movements, or directional signals that may not accurately represent the actual market dynamics in terms of liquidity, activity, or trends. Investors are strongly advised to understand the mechanism of these trading strategies, evaluate the associated risks when making investment decisions, and seek professional advice as needed.

[For reference only, does not constitute any investment recommENdation]

1. Leverage buy and hold
   
   Using leverage to purchase assets and hold them long-term, aiming for asset appreciation in the future and amplifying returns through leverage.
   
   
2. Day trading
   
   Short-term trading strategy where investors buy and sell financial instruments within the same day to profit from price fluctuations.
   
    
3. Mean reversal
   
   Assumes that prices will revert to their long-term average. Traders take advantage of deviations from the average by buying or selling, expecting prices to return to the mean.
   
   
4. Volatility arbitrage/trading
   
   An investment strategy that takes advantage of market price fluctuations. Traders buy and sell financial instruments with volatility to seek arbitrage opportunities.
   
   
5. Latency arbitrage
   
   A high-frequency trading strategy that uses price information delays to quickly buy and sell financial instruments.
   
   
6. Capture bid-ask spread
   
   By profiting from the difference between the buy price and the sell price, traders frequently buy and sell financial instruments to accumulate small gains.
   
   
7. Short term momentum trade
   
   An investment strategy based on short-term price momentum. Traders buy and sell assets utilizing the momentum of asset prices within a short period.
   
   
8. Futures basis trading
   
   Utilizes differences between futures contract prices and spot prices. Traders buy or sell futures contracts while simultaneously trading in the spot market to profit from basis changes.
   
   
9. Premium /Discount mean reversal
   
   Trades based on the premium or discount of financial instruments relative to their intrinsic value, expecting prices to revert to their long-term average.