HKFE allays stock futures fears
THE Hong Kong Futures Exchange (HKFE) is confident that the launch of stock futures on HSBC Holdings and Hongkong Telecom today will not increase the volatility of the stock market.
Chairman Leong Ka-chai said yesterday neither stock futures nor index futures would create too much of stir in the cash market.
On the contrary, they would increase liquidity in the market.
Secretary for Financial Services Michael Cartland said volatility was already in the market long before the launch of stock futures.
Stock futures contracts are futures contracts on individual companies listed on the stock exchange.
Initially, future contracts on heavyweights HSBC and Hongkong Telecom will be listed.
HKFE's chief executive Ivers Riley expected the new derivative products to get off to a good start, though the response was not expected to be overwhelming. 'I hope it will be in the vicinity of a few hundred contracts. That it will mirror Sydney's experience which has been an average couple of hundred [contracts] a day for a few months and move up towards about 2,000 [contracts] a day.
Market players are concerned that stock futures might have the liquidity problem which is currently faced by sub-index futures and interest-rate futures, developed by HKFE before.
Mr Cartland said: 'In general, as we said before, these stock futures contracts still contribute to liquidity and should therefore be beneficial to overall market, and increase overall level of activities. That's good for everybody.' Next will be the introduction of currency futures.
Mr Riley said the response from a consultation on currency futures was good.
'There were no negative responses,' he said.