HKEx Plans To Start After-Hours Futures Trading In The Second Half Of 2012

Hong Kong Exchanges and Clearing Limited (HKEx) will proceed with a revised version of its proposal and start after-hours futures trading (AHFT) in the second half of 2012 after market support was found in a consultation.

HKEx published today (Thursday) its consultation conclusions on AHFT. The consultation paper, which was published in May of this year, drew 455 responses comprising of submissions from Exchange Participants (EPs) / Clearing Participants (CPs), professional and industry associations, market practitioners and individuals.

More than three-quarters of the respondents (353 out of 455, or about 78 per cent) supported the proposal, including 67 futures market EPs which accounted for 80 per cent of Hang Seng Index futures and H-shares Index futures market trading in the first half of this year.

After considering the responses received, HKEx will proceed with a revised version of its proposal (the revised version of the proposal is summarised in the appendix below).

AHFT is tentatively scheduled to start in the second half of 2012, subject to the approval of the necessary rule amendments by the Securities and Futures Commission and market readiness. Detailed implementation plans and schedules will be announced in due course.

“We found strong support for AHFT in our consultation and we thank all the respondents for sharing their views with us,” said HKEx’s Head of Trading Calvin Tai. “We have revised our proposal to address the concerns of respondents. To give EPs/CPs sufficient time to prepare for AHFT by making adjustments to their systems and operations, we now tentatively aim to introduce AHFT in the second half of next year.”

Futures market EPs/CPs interested in participating in AHFT need to prepare their systems and be ready for market rehearsals by mid-2012, and, where applicable, to arrange human resources to support AHFT.

The consultation paper and consultation conclusions are available on the HKEx website along with copies of respondents’ submissions.

Appendix

Revised Proposal’s Main Points

Products: Initially, Hang Seng Index (HSI) futures, H-shares Index (HHI) futures and gold futures.
Trading Hours: 5:00 pm to 11:00 pm for HSI futures, HHI futures and gold futures (the close of gold futures trading in the regular trading session will be changed to 4:15 pm).
Price limits: Sell orders with a price below 95 per cent of the last traded price for the spot month contract in the regular trading session and buy orders with a price above 105 per cent of the last traded price for the spot month contract in the regular trading session will not be allowed.
Clearing and Settlement: Trades will be registered as AHFT trades and cleared and settled on the following trading day.
Risk Management: Appropriate market monitoring will be in place during AHFT sessions as well as a mandatory variation adjustments and margin calls following the opening of the regular trading session on the next trading day, with mark-to-market losses and margin to be collected by 12:00 noon.