Let's have a futures contract on the next chief executive

This week Hong Kong Exchanges and Clearing launched its first volatility future. Based on the implied volatility of Hang Seng Index options, it's a worthy contract. In other markets, similar futures have provided professional investors with useful hedging tools. But it's never going to set the world alight; on its first trading day just 10 contracts changed hands.

If HKEx had really wanted to fire the investing public's imagination, it should have launched a futures contract on Hong Kong's next chief executive. Now that would have been a real attention grabber.

In the past, of course, there would have been no point in a futures contract on the contest to become chief executive. The outcome has always been settled well in advance with a quiet word to compliant Election Committee members.

But this time around things are different. Henry Tang Ying-yen's uncanny ability to screw up a clear run by tripping over his own feet within yards of the finishing tape has injected a heavy shot of uncertainty into the contest.

And where there is uncertainty about the future, there's a trading opportunity.

Here's how it would work. To land the job, the successful candidate must win an absolute majority of votes from the 1,200 member Election Committee. So in the run-up to the first round of voting, HKEx would quote a number of votes for each prospective candidate, with each vote being worth, say HK$100.