HKEx to launch new stock index futures

PUBLISHED : Thursday, 08 August, 2013, 12:00am
UPDATED : Thursday, 08 August, 2013, 3:50am

Hong Kong's stock exchange is set to list its first stock index futures contract which tracks the performance of firms listed in Hong Kong and on the A-share markets.

The aim is to tap the growing demand from offshore investors who want to hedge their exposure to A shares.

The CES China 120 Index Futures, developed by a joint venture formed by bourse operators in Hong Kong, Shanghai and Shenzhen, is due to be listed in Hong Kong on Monday.

The index tracks the most liquid stocks listed in the three cities. As of July 2, the index has lost 16.1 per cent this year, reflecting weakened economic growth and capital outflows from emerging markets due to rising bond yields in the United States.

Margin for the futures is set at HK$12,000 per contract, accounting for 6.5 per cent of the notional value of each contract. That ratio is lower than for Hong Kong Exchanges and Clearing's two existing futures products, the Hang Seng Index futures and H-share index futures.

HKEx has been eyeing opportunities for new business as Beijing grants more quota to foreign institutional investors through the qualified foreign institutional investor and renminbi qualified foreign institutional investor schemes.

The exchange will offer contracts expiring in August, September, December and March.

HKEx said it would not charge its commission levy of 60 HK cents per contract in the first six months of trading.

Calvin Tai, co-head of equities, fixed income and currency in HKEx's global markets division, said HKEx is considering rolling out exchange-traded fund products and options on the same underlying index.