Hong Kong Exchanges and Clearing Ltd
| Hong Kong Exchanges and Clearing Limited | |
| |
| Founded | 2000 |
|---|---|
| Headquarters | Hong Kong |
| Key People | Alejandro Nicolas Aguzin, CEO; Laura Cha, Chairman |
| Products | Cash equities, bonds and ETFs; futures and options in equity indexes and single stocks, and interest-rate futures |
| Website | www.hkex.com.hk |
| Releases | Company News |
Hong Kong Exchanges and Clearing Limited (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 went public and listed on its own exchange in 2000, is host to the benchmark Hang Seng Index.[1]
On July 20, 2020, HKEX became the world's largest exchange operator by market capitalization, valued at US$62 billion.[2]
HKEX acquired the London Metal Exchange in the summer of 2012. [3] HKEX agreed in June to pay 1.39 billion British pounds ($2.15 billion) for the exchange, outbidding Intercontinental Exchange.[4] The transaction was the exchange's first overseas acquisition and gave the exchange its first commodities contracts.
In 2021, the exchange posted volume of 433 million contracts, down 0.9 percent from the previous year, according to the FIA 2021 Annual Volume Survey, making it the 17th largest exchange.
Hong Kong Exchanges and Clearing Ltd is a Primary Member of CCP Global, the global association of Central Counterparties (CCP), which represents 42 members who operate more than 60 individual CCPs across EMEA, the Americas and the Asia-Pacific region.[5]
History[edit]
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.[6]
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 Growth Enterprise Market (GEM) of the Stock Exchange of Hong Kong Limited launched in 1999. The GEM listing rules under section 23 of the Securities and Futures Ordinance prescribe the requirements for the listing of securities on the Growth Enterprise Market of the Stock Exchange of Hong Kong Limited. These requirements have to be met before securities may be listed.[7]
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.[8]
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.
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.
HKEX announced the launch of its commodities business on April 22, 2014. Four renminbi-denominated futures contracts (London Aluminum Mini Futures, London Zinc Mini Futures, London Copper Mini Futures and API 8 Thermal Coal Futures) are traded on its derivatives market in Hong Kong.[9] The contracts are cash settled, which avoids tax barriers and makes it easier to move metals in and out of the mainland.[10]
On November 17, 2014, China launched a program called the Shanghai-Hong Kong Stock Connect, connecting HKEX with the Shanghai Stock Exchange, offering investors in Hong Kong and the Chinese mainland unprecedented access to markets across the border. The program allows investors in Hong Kong to trade eligible shares in Shanghai, and vice versa.[11] [12]
In June 2015, HKEX announced the introduction of new volatility controls to help avoid a market collapse in an atmosphere of wild price swings in Chinese stocks. The measures, which include a closing auction as well as other volatility curbs, bring the exchange in line with other international exchanges in New York and Europe. [13]
HKEX's offshore renminbi/dollar currency futures contract, launched in September 2012, saw steady growth, with a record high of more than 3,700 contracts traded in February of 2016.
In April of 2016, HKEX launched renminbi currency futures contracts against the Indonesian rupiah and the Malaysian ringgit as part of the exchange's push to diversify its revenue streams away from its traditional equity trading business because of weak stock markets. The exchange also launched a gold-settled contract in the third quarter of 2016.[14]
The exchange closed its trading floor on October 27, 2017 and became all-electronic.[15]
HKEX launched its first ferrous product, iron ore futures, on November 13, 2017. The futures, which are cash-settled TSI Iron Ore Fines 62 percent FE CFR China Futures, traded a total volume of 1,022 contracts in their first day trading session, among 11 exchange participants. HKEX waived the exchange fee for the first six months of trading.[16]
HKEX acquired Shenzhen-based Ronghui Tongjin Technology in July 2019. The exchange took a 51 percent stake in the financial technology company. The deal, which made Ronghui Tongjin a subsidiary of HKEX, was part of a broader strategy to "develop strong alliances with technology partners," according to then HKEX Chief Executive Charles Li.[17]
In September 2019, HKEX made an offer for the London Stock Exchange Group for $36.6 billion. The proposed deal offered 2,045 pence plus 2.495 HKEX shares per LSE share. That would have valued each LSE share at 8,361 pence. The LSE board unanimously rejected the offer, citing "fundamental flaws." HKEX dropped its bid in October 2019, after failing to secure support from LSE shareholders. Several factors in the failed overture included the LSE's view that Shanghai, not Hong Kong, will be the long-term financial capital of China, concerns over a Chinese exchange having ownership of the UK's flagship stock exchange group, and worries over social unrest in Hong Kong that have damaged the territory's reputation.[18][19][20][21]
On October 23, 2020, HKEX began offering the first listings of exchange-traded funds (ETFs) in Hong Kong and Shenzhen under the Hong Kong-Mainland ETF Cross-listing Scheme, which facilitates cross-listing of ETFs between markets in Hong Kong and Mainland China. The two new ETFs, CSOP Yinhua CSI 5G Communications Theme ETF (Stock code: 3193) and Hang Seng Harvest CSI 300 Index ETF (Stock code: 3130 / 83130), were approved by the SEC.[22]
In addition, HKEX announced on December 23, 2020, that it completed its first client clearing trades for two Japanese banks, further expanding the international reach of its clearing offerings. In that instance, HKEX’s OTC Clearing Hong Kong, cleared a U.S. Dollar-Offshore Renminbi Cross–Currency swap trade by Mizuho Bank and a U.S. Dollar-Hong Kong Dollar trade by MUFG Bank, with HSBC acting as the clearing broker for both trades. [23]
Charles Li, who had been the chief executive of HKEX since 2010, stepped down from the role in December 2021. Nicolas Aguzin took over the CEO role on May 24, 2021.[24]
In February 2021, HKEX took a seven percent stake in the Guangzhou Futures Exchange (GFEX), an investment of 210 million yuan, or approximately $32.5 million. HKEK said that it was the first equity investment in a Chinese futures exchange by a non-mainland Chinese investor and would allow HKEX to help build China’s derivatives markets.[25] [26] On August 27 of that year, HKEX announced it had signed a Memorandum of Understanding (MOU) with GFEX for strategic cooperation in promoting sustainability and facilitating the development of the Guangdong-Hong Kong-Macao Greater Bay Area.[27]
On July 5, 2022, HKEX announced the launch of the Hong Kong International Carbon Market Council, in which HKEX has partnered with a number of corporations and financial institutions as inaugural Council members to explore carbon opportunities in the region. The main focus of the collaboration is to develop an international carbon market that contributes to the realization of carbon neutrality goals and the development of the green and sustainable finance ecosystem in Hong Kong, Mainland China and beyond.[28]
2012 Acquisition of London Metal Exchange[edit]
On July 25, 2012, London Metal Exchange shareholders approved a $2.2 billion takeover offer from Hong Kong Exchanges & Clearing Ltd. The vote was more than 99 percent in favor of the deal, according to an LME spokesman. HKEX's proposal won out over offers from its rivals CME Group, Intercontinental Exchange and NYSE Euronext. Sixty-seven stockholders controlling 12.86 million shares voted on the transaction, with 64 owners holding 12.82 million shares backing the bid. In a separate tally at an extraordinary general meeting, 12.75 million shares, or 99.24 percent, were voted for the sale and 98,000 against. [29]
LME continues to be based in London and to be regulated by the U.K. Financial Conduct Authority. HKEX said the deal would help grow the number of clients in China and help disperse LME data across Asia. In addition, HKEX said it would "keep the LME’s existing warehousing network, help the bourse develop its own clearing house and freeze trading fees until at least the start of 2015." [30]
Swap Connect[edit]
On May 15, Hong Kong Exchanges and Clearing Limited celebrated the launch of Swap Connect, a mutual access program between Hong Kong and Mainland China's interbank interest rate swap markets. HKEX, through its clearing subsidiary OTC Clear, had been working on Swap Connect with China Foreign Exchange Trade System (CFETS) and Shanghai Clearing House (SHCH). The program launched initially with a Northbound channel.[31] At the initial stage, the daily trading quota of Swap Connect is set at 20 billion yuan.[32]
Contract Volume[edit]
| Year | Total Annual Volume | Percent Change |
| 2021 | 433,092,595 | (-) 0.9% |
| 2020 | 437,073,315 | (-) 0.37% |
| 2019 | 438,690,021 | (-) 8.79% |
| 2018 | 480,966,627 | 29.2% |
| 2017 | 372,186,941 | 8% |
| 2016 | 344,642,173 | |
| 2015 | 359,364,547 | 12.4% |
| 2014 | 319,590,751 | 6.1% |
| 2013 | 301,128,507 | 151.4% * |
| 2012 | 119,802,638 | (-) 14.7% |
| 2011 | 140,493,472 | 21.1% |
* 2013 volume includes contracts from merger of HKEX with LME
Key People[edit]
HKEX's Board is responsible for providing leadership, either directly or through its committees, to HKEX and its subsidiaries (Group) in order to deliver long-term value to shareholders and other stakeholders. 10 Board Committees assist the Board in focusing on specific matters. The Management Committee has delegated authority from the Board to perform the day-to-day management functions of the business and implement all projects and initiatives as approved by the Board.[33] As of April, 2022, the Management Committee members are:
- Alejandro Nicolas Aguzin, CEO
- John Buckley, Co-Chief Operating Officer, Head of Exchange Operations & Transformation
- Matthew Chamberlain, Chief Executive, LME
- Bonnie Y Chan, Head of Listing
- Paul Chow, Group General Counsel
- Tori Cowley, Group Chief Communications Officer
- Vanessa Lau, Group Chief Financial Officer
- Richard Leung, Group Chief Technology Officer
- Mao Zhirong, Head of Mainland Development
- Kerry Rooks, Group Chief People Officer
- Adam Singer, Group Chief Compliance Officer
- Glenda So, Co-Head of Markets
- Richard Wise, Group Chief Risk Officer
- Wilfred Yiu, Co-Head of Markets
Sustainability and Green Exchange at HKEX[edit]
Information about HKEX's corporate commitment to Sustainability and Green Exchange (STAGE) can be found on its website here.
Products[edit]
The HKFE started with Hang Seng Index futures, adding options on the futures in 1993. The stock exchange launched equity options in September 1995.
The first ETF listed on HKEX in 1999. With over 130 ETFs listed on HKEX, Hong Kong-listed ETFs currently trade over $6.7 billion a day, with assets under management standing at over $300 billion as of 30 September 2020.[34]
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
In May 2013, HKEX introduced new stock index futures and stock futures on three A-share Exchange-Traded Funds (ETFs) as part of its continuing efforts to expand its suite of Mainland China-related products. The exchange introduced CES China 120 Index futures, the only futures contract based on an underlying index that tracks both China’s A-shares and China stocks listed in Hong Kong, in July 2013.[35] [36]
On November 17, 2014, HKEX launched the Shanghai-Hong Kong Stock Connect linkage, which linked Hong Kong with mainland China by adopting a share trading system with the Shanghai Stock Exchange.[37] [38]
HKEX said on September 19, 2019 that it would launch Indian Rupee (INR) currency futures in the fourth quarter of the year. HKEX plans to introduce two new futures contracts: the INR vs U.S. Dollar (INR/USD) futures; and the INR vs Renminbi traded in Hong Kong (INR/CNH) futures. The INR/CNH futures contracts will be the first of their kind globally, and are a part of HKEX's strategy to bolster Hong Kong’s role as the region’s FX and fixed-income trading hub.[39]
The exchange announced on November 5, 2020 that it would introduce futures and options contracts based on the Hang Seng TECH Index on November 23, 2020 and January 18, 2021 respectively, subject to regulatory approval and market readiness.
The Hang Seng TECH Index futures and options are the first exchange-traded derivatives contracts to track the TECH Index, complementing HKEX’s flagship Hang Seng Index and Hang Seng China Enterprise Index products. The Hang Seng TECH Index was launched on July 27, 2020 and tracks the 30 largest technology companies listed in Hong Kong.[40]
On October 18, 2021, HKEX launched a new A-share derivatives contract, the MSCI China A 50 Connect Index Futures.[41]
On November 28, 2022, HKEX launched its Hang Seng TECH Index Futures Options along with several enhancements to its existing Hang Seng TECH Index derivatives products.[42]
Trading Hours[edit]
Trading hours are from 9:45 a.m.-12:30 p.m. and 2:30 p.m.-4:15 p.m.
HKEX received regulatory approval to offer After-Hours Futures Trading (AHFT) in February 2013 and introduced AHFT on Monday, April 8, 2013. The move was designed to enable market participants to hedge or adjust their positions in response to market news and events during the European and U.S. business days, according to HKEX.[43] Starting on June 17 2019, trading hours in the After-Hours Trading (T+1) Session were extended by two hours and are now open from 5:15 p.m. to 3 a.m. In addition, the T+1 Session Cutoff Time (the deadline for system input of post-trade after the T+1 Session) was extended from 1:45 a.m. to 3 a.m. [44]
Resources[edit]
References[edit]
- ↑ Hang Seng Index. HKEX.
- ↑ Hong Kong Exchanges and Clearing soars to become world’s largest exchange operator by market cap. Yahoo News.
- ↑ London Metal Exchange Shareholders Vote in Favour of Acquisition by HKEX. Hong Kong Exchanges and Clearing Ltd.
- ↑ Hong Kong Exchanges Bid For LME Beats Out ICE. Bloomberg.
- ↑ CCP Global Members. CCP Global.
- ↑ Official history. HKEx.
- ↑ GEM Listing Rules. HKEX.
- ↑ Speech by Geoffrey Yeh, chairman. HKFE.
- ↑ HKEx Announces Plans for its First Asia Commodities Contracts. HKEx.
- ↑ HKEx moves into commodities business. The Financial Times.
- ↑ Shares in HKEx Jump on Mainland Connectivity News. The Wall Street Journal.
- ↑ Joint Announcement of China Securities Regulatory Commission and Securities and Futures Commission. China Securities and Futures Commission.
- ↑ Hong Kong stock exchange to introduce volatility controls from mid-2016. Reuters.
- ↑ HKEx plans to launch Asian FX futures, gold contracts. Reuters.
- ↑ HKEx closes iconic trading floor as it goes all-electric. Finextra.
- ↑ HKEX's first ferrous metal product, iron ore futures, debuts. HKEX.
- ↑ HKEX Completes Acquisition of Ronghui Tongjin Majority Stake. HKEX.
- ↑ Hong Kong Exchange Makes Unsolicited $36.6 Billion Bid for LSE. Bloomberg.
- ↑ London Stock Exchange rejects Hong Kong takeover offer. CNBC.
- ↑ HKEX drops pursuit of London Stock Exchange. The Trade.
- ↑ Hong Kong Stock Exchange Drops Nearly $37 Billion Bid for London Rival. The Wall Street Journal.
- ↑ HKEX WELCOMES FIRST HONG KONG/MAINLAND ETF CROSS-LISTING. HKEX.
- ↑ HKEX completes first client cleared trade for Japanese banks. TheTrade.
- ↑ Former JPMorgan banker takes the helm at HKEX. The Asset.
- ↑ HKEX Invests In Guangzhou Futures Exchange. HKEX.
- ↑ Hong Kong bourse to take 7% stake in Guangzhou Futures Exchange. Reuters.
- ↑ HKEX Signs MOU with Guangzhou Futures Exchange. HKEX.
- ↑ HKEX Launches Hong Kong International Carbon Market Council, Unveils Carbon Market Plans. HKEX.
- ↑ LME Shareholders Approve HKEx’s $2.2 Billion Takeover Bid. Bloomberg News.
- ↑ Hong Kong Exchanges Bid For LME Beats Out ICE. Bloomberg.
- ↑ HKEX Celebrates Launch Of Swap Connect. Mondovisione.
- ↑ Northbound Swap Connect: China opens derivatives market to global investors via Hong Kong for the first time. South China Morning Post.
- ↑ Corporate Governance Structure. HKEX.
- ↑ HKEX WELCOMES FIRST HONG KONG/MAINLAND ETF CROSS-LISTING. HKEX.
- ↑ HKEx To Introduce More Mainland-Related Futures. HKEx.
- ↑ CES China 120 Index Futures. HKEX.
- ↑ HKEx To Introduce More Mainland-Related Futures. AFP.
- ↑ Stock Connect. HKEX.
- ↑ HKEX TO LAUNCH INDIAN RUPEE CURRENCY FUTURES. HKEX.
- ↑ HKEX to Introduce Futures and Options on Hang Seng TECH Index. PRNewswire.
- ↑ HKEX LAUNCHES MSCI CHINA A 50 CONNECT INDEX FUTURES. HKEX.
- ↑ HKEX - News Centre Corporate News Releases 2022 HKEX Launches Hang Seng TECH Index Futures Options and Further Enhances Existing Hang Seng TECH Index Derivatives Products HKEX Launches Hang Seng TECH Index Futures Options and Further Enhances Existing Hang Seng TECH Index Derivatives Products. HKEX.
- ↑ HKEx To Introduce After-Hours Futures Trading on 8 April. Press Release.
- ↑ After Hours Trading. HKEX.