HKEX to Implement Enhancements to Derivatives Market Position Limits
Hong Kong Exchanges and Clearing Limited (HKEX) is pleased to announce today (Monday) that it is to introduce a suite of position limit enhancements to Hong Kong's derivatives market. The enhancements are part of the Group's ongoing commitment to elevating Hong Kong as Asia's leading derivatives trading and risk management centre.
The changes follow HKEX's consultation conclusions published in July 2022; and the Securities and Futures Commission's (SFC) adjustments to the statutory position limit requirements, as announced in its relevant consultation conclusions1. The enhancements will take effect on 22 December 2023, subject to regulatory approval.
Wilfred Yiu, HKEX Co-Chief Operating Officer and Head of Equities, said: “At HKEX, we are committed to introducing market microstructure enhancements to continue to boost the vibrancy and attractiveness of our markets. We are therefore delighted to implement these changes to our derivatives market position limits, providing investors with more capacity and greater flexibility, allowing them to better manage their market exposure while ensuring proper risk controls.”
Based on HKEX's 2022 consultation conclusions, these adjustments will be implemented as follows:
HKEX will increase Single Stock Option position limits to 250,000 contracts. Two additional tiers (200,000 and 250,000 contracts) will be added to the existing three-tier Single Stock Options position limit model (currently, 50,000, 100,000, 150,000 contracts);
the existing 5,000 contracts per expiry month Single Stock Futures position limit model will be revised to a five-tier model, with net position limits of 5,000, 10,000, 15,000, 20,000, and 25,000 contracts; and
the additional position limits that apply to Hang Seng Index and Hang Seng China Enterprise Index mini derivatives contracts will be removed.
Separately, to observe the SFC's updated statutory position limit requirements2, HKEX will also make the following enhancements:
increase the combined position limit for USD/CNH futures and options, Mini USD/CNH futures and CNH/USD futures from 8,000 to 30,000 long or short position delta for all contract months; and
increase the spot month combined position limit for USD/CNH futures and options, from 2,000 to 15,000 long or short position delta.
Mr Yiu added: “We look forward to continue working with market regulators and the financial community more broadly to further support the development of Hong Kong’s derivatives market, providing our customers with greater choice and enhanced flexibility.”
More details are available on the HKCC, HKFE and SEHK circulars published today. Please refer to the SFC’s consultation conclusions and its website on other additional changes to the statutory position limit regime.
- Please see the SFC’s consultation conclusions on the position limit regime in November 2022 and June 2023.
- Under the Securities and Futures Ordinance and the Securities and Futures (Contracts Limits and Reportable Positions) Rules.