HONG KONG:  HKEX to Implement Enhancements to Derivatives Market Position Limits

Monday November 20 2023

On 20^th November 2023, Hong Kong Exchanges and Clearing Limited (HKEX) announced that it is to introduce a suite of position limit enhancements to Hong Kong’s derivatives market. The enhancements are part of the Group’s ongoing commitment to elevating Hong Kong as Asia’s derivatives trading and risk management centre. 

The changes follow HKEX’s consultation conclusions published in July 2022; and the Securities and Futures Commission’s (SFC) adjustments to the statutory position limit requirements, as announced in its relevant consultation conclusions. The enhancements will take effect on 22^nd December 2023, subject to regulatory approval. 

Based on HKEX’s 2022 consultation conclusions, these adjustments will be implemented as follows: 

• HKEX will increase Single Stock Option position limits to 250,000 contracts. Two additional tiers (200,000 and 250,000 contracts) will be added to the existing three-tier Single Stock Options position limit model (currently, 50,000, 100,000, 150,000 contracts); 
• the existing 5,000 contracts per expiry month Single Stock Futures position limit model will be revised to a five-tier model, with net position limits of 5,000, 10,000, 15,000, 20,000, and 25,000 contracts; and 
• the additional position limits that apply to Hang Seng Index and Hang Seng China Enterprise Index mini derivatives contracts will be removed. 

Separately, to observe the SFC’s updated statutory position limit requirements, HKEX will also make the following enhancements: 

• increase the combined position limit for USD/CNH futures and options, Mini USD/CNH futures and CNH/USD futures from 8,000 to 30,000 long or short position delta for all contract months; and 
• increase the spot month combined position limit for USD/CNH futures and options, from 2,000 to 15,000 long or short position delta. 

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