HKEX Increases Trading Hours to Bridge International Gap

With interconnected global markets having more significance on price discovery of tradable instruments, Hong Kong's Stock and Derivatives exchange has announced that it received regulatory approval for rule changes that will enable it to offer After-Hours Futures Trading (AHFT) and it plans to introduce AHFT on Monday, 8 April 2013.

From 8 April, Hang Seng Index and H-shares Index futures will be available for trading from 5 pm to 11 pm (after-hours trading) in addition to the regular trading sessions: 9:15 am to 12 noon and 1 pm to 4:15 pm. Gold futures will be considered for inclusion in AHFT at a later stage.

The Hang Seng Index is offered as a rolling CFD contract by brokers, the new extended hours will have a positive impact on Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term in the contract. Other major indices trade beyond the normal exchange hours as the price of the instrument is correlated to other indices.

HKEx will arrange briefing sessions for its Participants in early March to explain the trading, clearing and Risk Management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term arrangements for AHFT. Participants interested in joining AHFT must complete all related system tests required by HKEx.

HKEx decided to offer AHFT for the following strategic and business reasons:

• AHFT will enable market participants to hedge or adjust their positions in response to market news and events during the European and US business days;
• With Hong Kong becoming an offshore renminbi (RMB) centre, AHFT will enable HKEx to cater for international interest in RMB products in the future;
• AHFT is a prerequisite for HKEx to move into asset classes traded on a global basis, including foreign exchange; and
• Over time, AHFT can help attract more European and US investors to HKEx’s derivatives market.

HKEx will monitor the development of AHFT and review the trading and clearing operations and risk management arrangements for AHFT six months after the implementation.

Key Arrangements for AHFT

Trade Registration and Clearing and Settlement

Trades will be registered as AHFT trades and cleared and settled on the following trading day.

Price Limit Up/Down Mechanism

Sell orders with a price below 95 per cent of the last traded price for the spot month contract in the regular trading session (9:15 am to 12 noon and 1 pm to 4:15 pm) and buy orders with a price above 105 per cent will not be allowed.

Risk Management

Appropriate market monitoring will be put in place during the AHFT session. There will be no intra-day variation adjustments or margin calls during the AHFT session. A mandatory variation adjustment and a margin call will be made following the opening of the regular trading session on the next trading day based on that day’s Calculated Opening Prices, with mark-to-market losses and margin to be collected by 12:00 noon.

Holidays

If it is a Hong Kong public holiday, there is half-day trading in the HKEx securities market or it is a bank holiday in both the UK and US, there will be no AHFT.

Typhoon and Black Rainstorm Warnings

If a Typhoon Signal 8 or above or a Black Rainstorm Warning is in effect after 12 noon, there will be no AHFT.

Other

The Block Trade Facility will not be available in AHFT.