HKEx to introduce more Mainland-related futures, ETFs
22 May 2013
News, China, Hong Kong
By Toby Garrod
Hong Kong Exchanges and Clearing Limited (HKEx) plans to introduce new stock index futures and stock futures on three A-share exchange traded funds (ETFs) as part of its continued efforts to expand its suite of mainland China-related products.
With this, China Exchanges Services Company Limited (CESC) will license the exchange to introduce futures on the CES China 120 Index (CES 120), which is part of CESC’s Cross Border Index Series, on July 8, subject to regulatory approval.
The Cross Border Index Series includes the CES 120 and its two sub-indices, the CES China A80 Index (CES A80) and the CES China HK Mainland Index (CES HKMI). The CES 120, which is compiled by CESC, is designed to track the performance of the 80 most liquid and largest stocks listed in mainland China as well as the 40 most liquid and largest Mainland companies listed in Hong Kong.
The CES 120 was developed by CESC (a joint venture between HKEx, the Shanghai Stock Exchange and the Shenzhen Stock Exchange) to track the performance of the largest and most liquid China stocks listed in mainland China and Hong Kong.
The futures contract will be the world's first exchange-listed derivatives product designed to provide a convenient, cost efficient and simultaneous exposure to leading China stocks from the Mainland and Hong Kong markets through a single exchange-traded futures contract that can be used for trading or hedging purposes. The contract would also serve as an effective risk management tool for institutions and investors with China-related equity portfolios, including ETF market makers, to hedge their positions in China-related ETFs.
"CES 120 futures will be the first exchange-traded futures on an index that includes A-shares as well as H-shares, red chips and other Hong Kong-listed shares of Mainland companies," said HKEx Chief Executive Charles Li. “The launch of CES 120 futures will be a milestone in our equity derivatives strategy of building on our current business and offering an extensive product suite across Hong Kong and Mainland underlying securities."
"We will continue working with our CESC joint venture to offer a suite of products with underlying China-related securities, and roll out cross-market and A-share-related products based on CESC indices," Mr Li said. "HKEx is committed to offering a variety of products to our customers and relevant risk management tools for their portfolio management requirements."
“We welcome HKEx’s plans to launch the first CESC index futures,” said CESC Chief Executive Bryan Chan. “HKEx is our most important platform for product development and trading outside of mainland China. We will further expand our customers’ access to the suite of CESC index products. Index derivative products have always been part of our plans and we look forward to the launch of more products at HKEx based on our indices.”
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