OREANDA-NEWS. May 29, 2018. Hong Kong Exchanges and Clearing Limited (HKEX) will reduce fees and introduce other changes in its stock futures market on 3 July 2018 to facilitate further growth in the market by reducing barriers to further product adoption.

Fee reductions

  • Settlement fee for all stock futures contracts will be reduced from $10 per contract to $2 per contract.
  • New trading fee structure will be introduced to reduce transaction costs.

New Trading Fee Structure

A full list of the stock futures with the new tier levels is in Attachment I of a circular on the HKEX website.

In addition, HKEX will review the tier levels annually starting in January of next year to adjust for any substantial change in the nominal values.  There will also be changes as and when necessary to reflect capital adjustments to the underlying stock. 

Other changes

  • The Final Settlement Price (FSP) methodology will be revised to reduce the difference between the FSP of the futures contract and the underlying stock price at expiration.

Current FSP Method

New FSP Method

The average of: 1) the midpoints of the best bid and best ask for the underlying stock taken at five-minute intervals from five minutes after the start of, and up to five minutes before the end of, the Continuous Trading Session of the Stock Exchange of Hong Kong (SEHK), a wholly-owned subsidiary of HKEX; and 2) the closing price of the underlying stock as quoted by SEHK on the Last Trading Day (LTD).

The official closing price of the underlying stock as quoted by SEHK on the LTD.
Notes: -  The FSP of contract months with LTD prior to 3 July 2018 will be determined by the current method and the FSP of contract months with LTD on or after 3 July will be determined by the new method. 
  - If no official closing price is available on the LTD due to events such as typhoon or black rainstorm warning, or trading suspension of the underlying stock, the FSP will be the last available official closing price of the underlying stock before the LTD. 
  • HKEX is inviting applications for a Liquidity Provider programme that will cover 10 selected stock futures contracts (details are in Attachment II of a circular on the HKEX website).
  • The Proprietary Trader Programme for stock futures will be revised (details are in Attachment III of a circular on the HKEX website).
  • If trading of the underlying stock has been suspended for three months or more, or has been approved for privatisation, trading of the stock futures contract may be discontinued.