Futures traders left cold by new evening session
Transaction volumes may remain thin for some time amid lack of interest and short US overlap
Index futures can be used by issuers of callable bull/bear contracts (CBBCs) and warrants to hedge their risks, but local players have expressed little interest in trading them in the new night trading session.
"All our hedging activities can be done during the daytime," said Edmond Lee, director of global equity flow at SG Securities.
"At night, as there is no buy-back or sell-out [of CBBCs] when the cash market is closed, [and] we don't need to do extra hedging."
Investors buy CBBCs or warrants to bet on the direction of movement of a stock or an index.
Starting this week, Hong Kong Exchanges and Clearing (HKEx) added a 5pm to 11pm session for trading Hang Seng Index (HSI) and H-share index futures. Volumes have so far been thin.
UBS is another heavyweight player in the city's CBBC and warrant market. The bank required all its traders to attend a training session for night index futures trading recently, yet the traders are not enthusiastic about the new session, said Johnny Yu, its managing director for equity derivatives sales in Asia.