HKEX launches Hang Seng TECH Index Futures Options, adds after-hours session

Rick Steves

“The launch of the Hang Seng TECH Index Futures Options and enhancements to the broader suite of Hang Seng TECH Index derivatives today will provide global investors even more choice and flexibility, helping them to successfully manage their portfolios and risks.”

Hong Kong Exchanges and Clearing Limited (HKEX) has launched Hang Seng TECH Index Futures Options, complementing the existing derivatives suite on Hang Seng indices.

Investors holding Options on Futures (OOF) will now have the opportunity to manage their risk with reference to a futures position on HKEX, prior to the settlement of the underlying futures contract.

Strong momentum of OOFs and Hang Seng TECH Index products

OOFs were first launched by HKEX in August 2021, having become one of the fastest growing products ever on the exchange’s derivatives market:

  • Average daily volume (ADV) of HKEX’s OOFs, Hang Seng Index Futures Options and Hang Seng China Enterprises Index Futures Options, recorded a monthly ADV of 48,220 contracts as at 23 November 2022, marking a significant increase from ADV of 4,072 contracts in 2021. The combined open interest of HKEX’s OOFs also exceeded 1,119,000 contracts in November, with a notional value of US$52 billion.

HKEX announced that a trading fee discount will be applied to the new Hang Seng TECH Index Futures Options until further notice. The SFC’s commission levy of this contract will also be exempted for six months.

Wilfred Yiu, Chief Operating Officer & Co-Head of Markets at HKEX, said: “The strong momentum of OOFs and Hang Seng TECH Index products is great to see, and reflects our ongoing efforts to enhance Hong Kong’s position as a vibrant and connected international derivatives market. The launch of the Hang Seng TECH Index Futures Options and enhancements to the broader suite of Hang Seng TECH Index derivatives today will provide global investors even more choice and flexibility, helping them to successfully manage their portfolios and risks. HKEX is committed to continuing to build the breadth and attractiveness of Hong Kong’s derivatives market, supporting the city’s development as a world-class trading, investment and risk-management hub.”

HKEX adds Hang Seng TECH Index Options to After-Hours session

In addition to the launch of Hang Seng TECH Index Futures Options, HKEX has included Hang Seng TECH Index Options in the After-Hours Trading (AHT) Session.

According to the company, partially due to global market volatility, there has been significant increase in activity in the AHT session, with ADV in the AHT session at 107,191 contracts as at 22 November 2022, up 56% from 68,717 contracts compared with the full year of 2021.

The exchange group has also added new contract months for its Hang Seng TECH Index Futures and Hang Seng TECH Index Options, giving investors a more complete term structure for their trading and risk management needs.

Trading of the Hang Seng TECH Index Futures has gained strong momentum since its launch in 2021, with ADV growing 389% to 71,967 contracts as at 22 November 2022, from 14,718 contracts in 2021. The contract set new records in single-day volume and open interest in October and November 2022 respectively.

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