Hong Kong Exchanges and Clearing Ltd

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Hong Kong Exchanges and Clearing (HKEx) was created in 2000 as the holding company for the Stock Exchange of Hong Kong, the Hong Kong Futures Exchange (HKFE) and Hong Kong Securities Clearing, which provide an electronic platform for the trading, settlement and clearing of securities and derivatives.

HKEx, which listed on its own board in 2000, is the third-largest stock exchange in Asia - hosting the benchmark Hang Seng Index - and the 10th-largest globally in 2007.^[1] Hong Kong Exchanges & Clearing ranked as the world's 20th-largest derivatives exchange by volume in 2010 with over 116.05 million contracts traded, an increase of 17.8 percent on 2009's figure, according to the Futures Industry Association's (FIA) latest volume rankings for 2010.^[2] Total volume on the exchange, including listed securities, warrants, options, exchange-traded funds hit a record in 2010 of 34.99 trillion contracts.

In 2010, the exchange reported a record volume year for its derivatives contracts, with 116 million contracts traded, up 17.8 percent from the prior year. The previous record was in 2008, when the exchange handled 105 million contracts. It's 2010 volumes were driven largely by trading in the Hang Seng Index options, which posted 8.5 million contracts, up 56.6 percent from a year earlier. H-Shares index options totaled 2.9 million contracts in 2010, up 48.4 percent, while total stock options rose 28.8 percent to 61.1 million contracts.^[3]

Initial public offering (IPO) funds raised in 2010 of about $450 billion reached a record high, and made Hong Kong the world’s biggest IPO center for the second consecutive year.^[4]

Product Development

The HKFE started with Hang Seng Index futures, adding options in 1993. The stock exchange launched equity options in September 1995.

As of Jan. 9, 2008, the futures exchange listed futures and options on the following equity indexes: FTSE/Xinhua China 25; Hang Seng China H-Financials; Hang Seng Index; H-Shares; and the Mini-Hang Seng. It also listed 43 single-stock futures and 47 stock options, as well as Hibor futures and three-year exchange fund note futures.

Hang Seng Index futures are the largest single product, with 17.2 million traded in 2007, while stock options volumes climbed to 47 million.

• HKFE FTSE/Xinhua China 25 Index
• HKFE Hang Seng China H-Financials Index
• HKFE Hang Seng Index
• HKFE H-Shares Index
• HKFE Mini Hang Seng Index
• HKFE Mini H-Shares Index
• HKFE One-Month HIBOR
• HKFE Three-Month HIBOR
• HKFE Three-Year Exchange Fund Note
• HKFE Gold

It was revealed in March of 2012 that the exchange planned to add commodities to its list of products. It was believed that the exchange would focus on commodity products that coud be used by domestic Chinese traders and companies that wanted to hedge risk in renminbi.^[5]

Trading Hours

Trading hours are from 9:45 a.m.-12:30 p.m. and 2:30 p.m.-4:15 p.m.

On May 30, 2011, HKEx proposed after-hours futures trading (AHTF) for Hong Kong's derivatives market.^[6] Specifically, HKEx proposed trading of three futures contracts: Hang Seng Index (HSI) futures, H-shares Index (HHI) futures and gold futures, from 30 minutes after the regular market close (from 4:45 pm for the index futures and 5:30 p.m. for the gold futures) until 11:15 p.m.^[7]

History

The HKEx was formed on March 6, 2000, following an initiative by the Hong Kong administration to reform the securities and futures markets to improve their global competitiveness. The member-controlled Stock Exchange of Hong Kong Limited and Hong Kong Futures Exchange Limited were demutualized and combined with Hong Kong Securities Clearing Company Limited into a single holding company, which was listed on the stock exchange on June 27, 2000.^[8]

The stock exchange traces its roots to the Association of Stockbrokers in Hong Kong, established in 1891 and re-named the Hong Kong Stock Exchange (HKSE) in 1914. A second exchange, the Hong Kong Stockbrokers' Association was incorporated in 1921 and merged into the HKSE in 1947. Three more bourses followed - the Far East Exchange in 1969; the Kam Ngan Stock Exchange in 1971; and the Kowloon Stock Exchange in 1972 – which were later merged with the HKSE to form the Stock Exchange of Hong Kong Limited, which started operations on March 27, 1986.

The Hong Kong Futures Exchange was established in December 1976 as the Hong Kong Commodities Exchange, changing its name in 1985. The exchange initially traded Hang Seng Index futures using open outcry, with clearing and settlement from the wholly-owned HKFR Clearing Corporation. Options were added in 1993, with automated trading launched in November 1995. The trading floor was closed in 1999.^[9]

The Hong Kong Securities Clearing Company Limited was incorporated in 1989 and started operations in 1992. The HKEx listing was underwritten by HSBC, Merrill Lynch and Morgan Stanley.

The Growth Enterprise Market launched in 1999.

In September of 2004, China Securities Depository and Clearing Corporation (SD&C) and Hong Kong Securities Clearing Company (HKSCC) announced they had signed a memorandum of understanding (MOU) on information and personnel exchange. Goals of the MOU included facilitating the exploration of substantive joint projects, improving the two parties' clearing systems, developing secure and highly efficient clearing structures and managing clearing risks.

References

1. ↑ 2007 Market Highlights. WFE.
2. ↑ 2010 Annual Volume Survey. Futures Industry.org.
3. ↑ Hong Kong Posts Record Share Trading on China Concerns, Biggest IPO Year. Bloomberg.
4. ↑ FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010. HKEX.
5. ↑ HKEx to launch commodity derivatives. FT.com.
6. ↑ HKEx proposes after-hours futures trading. Financial Times.
7. ↑ HKEx Publishes Consultation Paper on After-Hours Futures Trading Proposal. HKEx.
8. ↑ Official history. HKEx.
9. ↑ Speech by Geoffrey Yeh, chairman. HKFE.

• Futures exchange members
• HKEx listing document