Hong Kong exchange granted CFTC US sales approval
Hong Kong Exchanges and Clearing (HKEX) has further
heightened the competition to host a liquid China equity index
futures contract by obtaining US regulatory approval to offer
its product to the US market. The exchange gained "no-action"
relief from Commodity Futures Trading Commission (CFTC) last
week, allowing it to sell its FTSE/Xinhua China 25 Index and
Hang Seng China Enterprises Index futures to US entities (see
While HKEX has listed the two contracts since May 2005 and
December 2003, respectively, the no-action status was expected
to be a significant marketing boost for the Hong Kong exchange,
which has been seeking to broaden its international appeal in
CFTC's decision, which came two years after the exchange
originally applied for no-action relief for its HSCEI contract,
would allow US investors to access the exchanges China-related
stocks, including H-shares (Chinese stocks listed on HKEX's
cash market) for the first time, instead of using OTC
alternatives. The use of such substitute products has meant
that some brokers have used up house position limits in the
contracts in order to cater to clients with OTC
"A few brokers had been banging on our door and asking
us to do something about this," according to Calvin Tai, SVP of
derivatives market development and operations at HKEX's
exchange division. An HKEX statement said that the exchange
"strives to make its products as accessible to as many global
investors as possible, and believes the markets [for China
index futures] will benefit from enhanced liquidity with the
participation of US investors."
This article is available exclusively to subscribers
Please log in to continue reading.
Not yet a subscriber?
Click here to take a free trial.
Already have an account? |
Please fill in your details below and a customer service representative will contact you.