The Securities and Futures Commission will relax position limits on the two most popular futures contracts, raising the cap by as much as 50 per cent from December to promote market growth. Brokers will be able to apply to the SFC to raise the limit on their own trading, which is set separately for each firm, by half. They can also apply to lift client holdings to as many as 15,000 contracts from 10,000. The higher cap will only apply to Hang Seng Index futures and options and H-share index futures and options contracts. The position limit rule was part of a package of government measures introduced during the 1998 Asian financial crisis to prevent manipulation of the stock and currency markets. The SFC also plans to scrap the other major restriction imposed during the crisis, the short tick rule limiting the selling of borrowed shares in a down market. The position caps are set at different levels, depending on the product, and anyone breaching the rule faces a fine of up to HK$100,000 and a two-year imprisonment. The change came after the SFC received supportive comments from 13 respondents in the consultation in May. 'Having considered all views, the SFC does not consider it advisable to extend the relaxations [to other products] at this time,' chief executive Martin Wheatley said.
