NEARLY six years after the Hong Kong Futures Exchanges was rocked by the global stock market crash, chief executive Gary Knight says the exchange is ''back, healthy and well'' and poised to play an even bigger role in the market. ''The exchange has risen almost phoenix-like from the devastation of the worldwide crash,'' he said yesterday. ''We can't force anyone to forget 1987 but we can ask people to look at changes and the restructuring that's occurred,'' he said. Mr Knight, who will vacate his position on December 31 when his contract expires, said the futures exchange should receive a boost when it was granted permission to have its contracts sold direct to investors in the United States and Britain. He said the British Securities and Investments Board was expected to give its approval soon and was optimistic that approval from the two US regulatory bodies - the Commodity Futures Trading Commission and the Securities and Exchange Commission - would occur before the end of the year. ''It's very important for US investment firms to be able to solicit clients to purchase our products,'' he said, adding that the CFTC recently asked for more information. Since Mr Knight joined the exchange in 1991, the futures market has made great strides. There are now 108 active members compared with 35 just two years ago, volume has climbed to about 8,000 contracts a day compared with less than 1,000, while turnover as a percentage of the stock exchange's was 100 compared with 125 per cent. Options trading, which began in March, has developed at a slower pace but Mr Knight said it was progressing as planned. Daily options turnover is now about 15 per cent of the futures market's but should hit 50 per cent within a year. ''Growth in options markets have been slow and steady,'' he said. ''You do not get great spikes in options volume. It's not like toothpaste where a new taste catches on. Options really involve people trying one contract at a time.'' There are now four registered options traders, or market-makers: Cresvale, Peregrine, Roctec and SBC Derivatives. W.I. Carr and Credit Lyonnais are planning to become registered traders soon. The exchange is now discussing the introduction of new products such as gold, currency and sub-index options. Mr Knight said the board was trying to determine what product was most needed. The decision required a lot of consideration since four out of five new products failed because investors had no need for them, he said. The exchange was exploring the feasibility of using a screen-based dealing system, he said. However, futures and options trading would probably remain on the floor, with other products utilising an electronic system. Salomon Brothers derivatives trader Stephen Diggle said while the options market had enjoyed a successful launch, there was some disappointment that the level of retail participation paled in comparison with the warrants market. ''The big challenge remaining for the exchange and for us is to get the retail buyer who deals in stocks and warrants to deal in a more active way in options,'' he said. ''That's the big marketing challenge.''
