HKEX launches VaR platform to support margin savings on diversified portfolios

Rick Steves

“Its enhanced margining model strengthens our resilience and boosts capital efficiency, supporting our clearing participants through margin savings on diversified portfolios.”

Hong Kong Exchanges and Clearing Limited (HKEX) has launched its new VaR Platform for post-trade clients, which will introduce margin requirements based on individual stock volatility, instead of the previously applied flat margin rate across all securities.

The VAR platform is expected to strengthen the resilience of the securities clearing house, in line with evolving international regulatory standards as well as promote enhanced transparency and cost-efficiency for HKEX market participants.

Strengthens resilience and capital efficiency

John Buckley, co-Chief Operating Officer at HKEX, commented: HKEX is committed to operating robust and resilient markets, in accordance with the best global practices. We are therefore very pleased today to be announcing another enhancement to our markets with the launch of the HKEX VaR Platform. Its enhanced margining model strengthens our resilience and boosts capital efficiency, supporting our clearing participants through margin savings on diversified portfolios. We look forward to continuing to work with our partners and stakeholders to further enhance our markets’ resilience and attractiveness, as we build the Marketplace of the Future.”

All Clearing Participants for securities transactions in HKEX’s markets will have the VaR Platform available to them, including its new margin and stress testing models for the calculation of margins and the Default Fund.

SPAC listings and Orion Cental Gateway

HKEX has recently announced the first Special Purpose Acquisition Company (SPAC) listing in Hong Kong. The regime was put in place in January 2022 and the exchange operator received ten SPAC listing applications as of 17 January, reflecting strong market interest and demand for this new listing route.

The SPAC listing framework focuses on welcoming applications from experienced and reputable SPAC Promoters seeking good quality De-SPAC Targets. The aim is to provide an attractive route to listing in Hong Kong whilst ensuring appropriate investor safeguards.

In late 2021, HKEX launched Orion Central Gateway – Securities Market (OCG-C), offering improved performance and reduced latency, compared with the vendor-supplied platform that it replaces.

The new market access platform for the Hong Kong securities market is fully integrated with HKEX’s securities trading system, the Orion Trading Platform – Securities Market (OTP-C). The launch of OCG-C aims to modernize and enhance HKEX’s market infrastructure, delivering resiliency and ensuring its competitiveness. The centralized access point enables Exchange Participants to connect their order management systems with HKEX’s securities trading platform.

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