The stock and futures exchanges have joined forces to offer investors a way of hedging risk in the highly volatile red-chip sector by jointly launching stock futures and options on two major red chips.
The chosen stocks - China Resources Enterprises and Shanghai Industrial Holdings - are the two largest constituent stocks in the Hang Seng China-Affiliated Corporations Index, accounting for 25 per cent of the index.
The decision to offer investors limited hedging in the red-chip sector is understood to have stemmed from recent highly-speculative activity in the sector.
Red chips - Hong Kong-listed companies controlled by mainland government organisations - have soared in recent weeks on actual and rumoured asset injections by their mainland parents.
Exchange chief executive Alec Tsui Yiu-wa said the introduction of stock options and futures on red chips would allow investors to manage risk.
'Studies of derivatives markets conducted in Hong Kong and overseas have demonstrated that responsibly managed traded derivatives programmes tend to reduce volatility in the underlying securities,' he said.