The futures exchange will not launch proposed Exchange Fund Notes (EFNs) futures and options this year due to concerns over the 2000 computer problem, according to an exchange source. The exchange's decision was not related to last week's unsuccessful listing of $34 billion worth of EFNs, the source said. The securities recorded only four transactions on their first day of trading and none at all on the second day of trade. The source said the exchange was not abandoning the plan to launch the EFN products. '[The launch] is a long-term project for the futures exchange to help the Government promote the local debt market,' he said. In addition to concerns over potential Y2K problems, the exchange had to focus on the migration of its flagship products, Hang Seng Index futures and options, from open-outcry to electronic trading. It had decided not to launch any new products this year. The exchange held talks in the first quarter this year with banks and the Hong Kong Monetary Authority on the proposed launch of EFN futures and options. The move is also aimed at stimulating retail investor interest in EFNs, which are regarded as equivalent to government paper. A futures broker said the exchange should not launch the EFN products. 'There has been very little trading in the listed Exchange Fund Notes,' he said. 'When the cash market has little or nearly no turnover, I doubt if there would be any demand for EFN derivative products,' the broker added. Standard Capital Group executive director Louis Tse Ming-kwong said existing market sentiment was not suitable for the launch of any new futures products. 'Market sentiment in Hong Kong is still bearish. Investors have no great interest in entering the market now,' he said. 'The exchange should wait for the appropriate time to launch EFN futures and options.' FUTURES
