Trading in Hang Seng 100 Futures and Options will introduce a new, broad-based instrument for investors and hedgers, according to Hong Kong Futures Exchange (HKFE) chief executive Randy Gilmore. The Hang Seng 100 index was introduced by HSI Services in April and has closely tracked the movement of the overall stock market. Mr Gilmore said that while many market practitioners were satisfied with the Hang Seng Index as a market barometer, the Hang Seng 100 index was a broader product that fulfilled a real market need. 'A need has arisen for an index with broader representation to reflect the new structure of the market, which includes a growing number of red chip and H shares,' Mr Gilmore said. Unlike the Hang Seng Index, which is based on the movement of 33 constituent stocks, the Hang Seng 100 tracks the 100 most liquid, biggest counters. 'Given the importance of Hang Seng 100 as a new benchmark, the HKFE has decided to introduce trading of futures and options on this index to provide investors with additional tools to manage their market risk,' Mr Gilmore said. In addition to being linked to the Hang Seng 100 stock index, the new contracts are much smaller than Hang Seng Index futures (about a fifth the size) and carry far lighter margin requirements. According to the HKFE, this smaller size will let investors use the new products to fine-tune their hedge (or stock insurance) ratios, making them an effective risk management tool. The existing Hang Seng Index futures and options contracts will continue to trade on the exchange's floor until they are moved to the electronic trading environment next year.