Hong Kong Exchanges and Clearing Limited (HKEx) will reintroduce trading of gold futures on the Hong Kong Futures Exchange Limited (Futures Exchange), a wholly-owned subsidiary of HKEx, on 20 October this year.
The gold futures initiative resulted from the policy direction set by the HKEx Board in January this year after the Directors discussed the final report from the consultant appointed by HKEx to study the feasibility of trading commodities derivatives in Hong Kong and considered the consultant's recommendations. The Futures Exchange offered gold futures trading in the 1980s and 1990s, before HKEx was established. The relaunch of gold futures is in response to the renewed interest in gold.
HKEx's gold futures market will be an open, competitive and regulated trading platform with products based on the London gold standard, which is popular among Hong Kong and international investors. Potential market participants include individual and institutional investors, bullion dealers, banks and corporations involved in gold businesses. Asian gold market participants will be able to use HKEx's gold futures to establish or adjust positions in reaction to local and overseas developments during the Asian business day (trading hours will be 8:30 am to 5:00 pm without lunch break, Monday through Friday, excluding Hong Kong public holidays).
Gold futures will be traded in US dollars at HKEx and cash-settled in US dollars, based on the results of consultations with Exchange Participants active in the gold business and their current practices when handling gold trading. Exchange Participants will be required to have US dollar settlement arrangements with the Clearing House before they can access HKEx's gold futures market.
Key Contract Specifications
|
Contract Size: 100 troy ounces (the contract's value on 30 June would have been about US$93,200). |
|
Price Quot |
|
Minimum Price Fluctu |
|
Trading Hours: |
|
Contract Months: Spot month and the next two calendar months. On the rollout day, the contract months available for trading will be October, November and December 2008. |
|
Settlement Method: Cash settled in US dollars. |
|
Exchange Fee: US$1.30 per contract per side. The fee will be waived during the first three months of trading. |
|
Cash Settlement Fee: US$1.30 per contract per side. |
|
Commission Levy: The Commission levy will be US$0.10 per contract per side, with an exemption during the first six months of trading. |
The complete contract specifications are attached.
HKEx plans to assist Exchange Participants in introducing gold futures trading opportunities to their customers and potential customers. Details will be announced in due course.
"We aim to develop an Asian liquidity pool for trading of gold futures based on the London gold standard commonly used by international players," said Calvin Tai, HKEx's Head of Derivatives Market. "This initiative will expand HKEx's range of derivatives market products and services to the commodities area."
"HKEx always takes a long-term view when introducing new products since they often take time to develop, so we do not have any specific volume or open interest targets for gold futures," Mr Tai added.
| Contract Specifications for Gold Futures | ||
| Underlying | Gold of not less than 995 fineness | |
|
Contract Size |
100 troy ounces | |
|
|
||
|
Trading Currency |
US dollars | |
| Contract Months |
Spot Month and the next two calendar months. The Chief
Executive of the Futures Exchange may, in consultation with the
Commission, introduce additional Contract Months for tradi |
|
| Price Quotation | US dollars and cents per troy ounce | |
| Minimum Fluctuation | US$0.10 per troy ounce | |
| Contracted Price | The price at which a Gold Futures Contract is registered by the Clearing House | |
| Contracted Value | Contracted Price multiplied by the Contract Size | |
| Position Limits | Nil | |
| Large Open Positions |
500 open contracts, in any one Contract Month, per
Exchange Participant for the Exchange Participant's own behalf; and |
|
| Tradi |
8:30 am - 5:00 pm ( |
|
| Tradi |
8:30 am - 5:00 pm (Hong Kong Time) without lunch break |
|
| Trading Method | The
Futures Exchange's Automated Tradi |
|
| Last Tradi |
The third last Hong Kong Business Day of the Contract
Month. If it is not a London Business Day, the Last Tradi |
|
| Final Settlement Day | The
first Hong Kong Business Day after the Last Tradi |
|
| Settlement Method | Cash settled contract for differences | |
| Settlement Currency | US dollars | |
| Final Settlement Price |
The price of gold per troy ounce in US dollars at
London Morni |
|
| Cash Settlement Value | The Final Settlement Price multiplied by the Contract Size | |
| Trading Fee (per contract per side) |
Exchange Fee | US$1.30 |
| The
amount indicated above is subject to cha |
||
| Levies (per contract per side) |
Commission Levy |
US$0.10 Nil |
|
Commission Levy is payable at the rate or of the amount prescribed from time to time pursuant to the Securities and Futures Ordinance. The amount indicated above is the US Dollar equivalent (at the conversion rate determined by the Futures Exchange, rounded to the nearest US Cents) of the amount currently prescribed under the Ordinance. No Investor Compensation Levy shall be payable for as long as an exemption notice published under section 25 of the Securities and Futures (Investor Compensation - Levy) Rules is in force. Exchange Participants will be notified accordingly of the exemption notice (and its termination). |
||
| Commission Rate | Negotiable | |
Note: All references to the London Gold Fixing prices are used with the permission of The London Gold Market Fixing Limited, which for the avoidance of doubt has no involvement with and accepts no responsibility whatsoever for the underlying product to which the Fixing prices may be referenced.
