FOREIGN institutions are more active than their local counterparts in Hang Seng Index (HSI) futures and HSI options trading, according to a Hong Kong Futures Exchange survey. The findings reveal that overseas investors accounted for 55.9 per cent of institutional trading at the exchange during the period from July 1 last year to June 30 this year. Futures Exchange chief executive Ivers Riley attributed this to the participation of more international institutional investors in the stock market, which gave rise to their need for instruments such as futures to help adjust their weighting in Hong Kong stocks. The growing number of global institutional investors in the local market meant keener competition in buying or selling Hong Kong stocks, he said. Overseas investors made 56.9 per cent of total institutional trading in HSI futures, and 49.2 per cent of total institutional trading in HSI options. Of the exchange's overall business, foreign institutional investors accounted for 22 per cent. However, 60.7 per cent of the total trading was contributed by local investors and 23.9 per cent by overseas investors. Local retail investors accounted for 43.3 per cent of all the exchange's trading. This indicates that local retail business remains an important driving force for the futures market development in Hong Kong. However, local retail investors accounted for only 12.2 per cent in the HSI options market. ''This confirms that local retail investors need education in order to better understand HSI options,'' says the report. About 67.6 per cent of the total overall transactions were for trading, 23.2 per cent for hedging and 9.2 per cent for arbitrage. An analyst said that showed most investors used futures and options as a risk-taking investment rather than an instrument to reduce risks. But Mr Riley said that already represented an increased activity in hedging. ''The accelerating shift toward more and more large-scale hedging activity is changing our market,'' he said.