The plan includes:
- Introducing three long-dated contract months in H-shares Index Options via a half-year cycle (ie June and December contract months) to cover maturities up to 2.5 years.
- Adding three long-dated contract months in HSI Options via a half-year cycle (ie June and December contract months) to complement the two existing long-dated contract months and cover maturities up to 3.5 years.
- Setting the Strike Prices for long-dated HSI Options and H-shares Index Options 20 per cent above, at and 20 per cent below the at-the-money Strike Price, rounded off to the nearest Strike Price, instead of the current plus or minus 5 per cent for existing long-dated HSI Options.
- Applying the existing strike intervals (see attachment) for long-dated HSI Options to the new long-dated contract months in HSI Options and H-shares Index Options.
There will be no market-making under the plan as Registered Traders would not be required to respond to quote requests or provide continuous quotes in the long-dated contract months.
Apart from the above, the contract specifications and trading arrangements for HSI Options and H-shares Index Options remain unchanged.
"Additional long-dated contract months in our derivatives market will provide investors with more exchange-traded financial instruments enabling them to take and manage longer-term positions in Hong Kong- and Mainland-related equities," said HKEx Chief Operating Officer Patrick Conroy. "Active institutional investors have indicated their support for this product concept and we have observed growing investor interest in these markets. Average daily HSI Options volume rose nearly 76 per cent last month from a year ago and average daily H-shares Index Options volume was up more than 192 per cent."
Please see the attachment for a table highlighting planned changes. The latest information on the futures and options contracts traded on HKEx's derivatives market, including contract specifications, is available on the HKEx website.
Attachment
Contract Months (assuming today's date, 16 February 2006)
|
Current Arrangements |
Under Plan |
|
|
Hang Seng Index Options |
Feb, Mar, Apr, Jun,
Sep, Dec, |
Feb, Mar, Apr, Jun,
Sep, Dec, |
|
H-shares Index Options |
Feb, Mar, Apr, Jun, Sep, Dec |
Feb, Mar, Apr, Jun,
Sep, Dec, |
* = Long-dated options
Existing Strike Intervals for Long-dated Hang Seng Index Options
(under the plan, these apply to all long-dated index options)
| Index points | Intervals |
| Below 4,000 | 100 |
| At or above 4,000 but below 8,000 | 200 |
| At or above 8,000 but below 12,000 | 400 |
| At or above 12,000 but below 15,000 | 600 |
| At or above 15,000 but below 19,000 | 800 |
| At or above 19,000 | 1,000 |
