HONG KONG: HKEX Launches Hang Seng TECH Index Futures Options

Monday November 28 2022

On 28^th November 2022, Hong Kong Exchanges and Clearing Limited (HKEX) announced the launch of its Hang Seng TECH Index Futures Options and several enhancements to its existing Hang Seng TECH Index derivatives products.

HKEX’s Hang Seng TECH Index Futures Options (Options on Futures, OOF) will begin trading and complement the existing derivatives suite on Hang Seng indices. Investors holding an OOF will now have the opportunity to manage their risk with reference to a futures position on HKEX, prior to the settlement of the underlying futures contract.

HKEX’s OOFs were launched in August 2021 and have been one of the fastest growing products ever on HKEX’s derivatives market. Average daily volume (ADV) of HKEX’s OOFs, Hang Seng Index Futures Options and Hang Seng China Enterprises Index Futures Options, recorded a monthly ADV of 48,220 contracts as of 23^rd November 2022, marking a significant increase from ADV of 4,072 contracts in 2021. The combined open interest of HKEX’s OOFs also exceeded 1,119,000 contracts in November, with a notional value of US$52 billion.

A trading fee discount will be applied to the new Hang Seng TECH Index Futures Options until further notice. The Securities and Futures Commission (SFC’s) commission levy of this contract will also be exempted for six months.

HKEX is also pleased to announce the inclusion of Hang Seng TECH Index Options in the After-Hours Trading (AHT) Session, commencing, 28^th November. In part, due to global market volatility, there has been significant increase in activity in the AHT session, with ADV in the AHT session at 107,191 contracts as of 22^nd November 2022, up 56% from 68,717 contracts compared with the full year of 2021.

In addition, HKEX has added new contract months for its Hang Seng TECH Index Futures and Hang Seng TECH Index Options (see appendix for details), which are also available for trading, giving investors a more complete term structure for their trading and risk management needs.  Trading of the Hang Seng TECH Index Futures has gained strong momentum since its launch in 2021, with ADV growing 389% to 71,967 contracts as of 22^nd November 2022, from 14,718 contracts in 2021. The contract set new records in single-day volume and open interest in October and November 2022 respectively.

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