HKEx seeks opinions on after-hours futures trading

Study shows many Hong Kong futures brokers are open in the evening to offer trading of European and US futures during London and New York business hours.

Hong Kong Exchanges & Clearing published a consultation paper on Monday seeking views on its proposal to introduce after-hours futures trading to strengthen Hong Kong’s derivatives market.

It is proposing the trading of three futures contracts, Hang Seng Index futures, H-shares Index futures and gold futures, from 30 minutes after the current market close (from 4.45pm for the index futures and 5.30pm for the gold futures) until 11.15pm.

Its research found many futures brokers in Hong Kong are open in the evening to offer trading of European and US futures during London and New York business hours. They include at least half of HKEx’s 183 Futures Exchange Participants. Together, that group of participants accounts for nearly 90% of Hang Seng Index futures turnover and nearly 95% of the H-shares Index futures turnover.

It also found after-hours futures trading is now common among other leading derivatives exchanges, with eight of the top 10 derivatives exchanges in terms of stock index futures turnover offering after-hours trading.

Turnover during after-hours trading in major derivatives exchanges ranges from 15% to 37% of the turnover during their regular trading hours.

In addition to aligning HKEx’s futures market with other leading markets, after-hours futures trading will allow investors in Hang Seng Index, H-shares Index and gold futures to trade during most of Europe’s business day and part of the business day in the US.

It will also provide additional business opportunities for futures exchange participants and position Hong Kong’s derivatives market for future growth.

“After-hours futures trading would allow our investors to hedge or adjust their positions in response to market news and events here and overseas during the new trading session,” HKEx Head of Trading Calvin Tai said.

“It will also prepare us to take advantage of the opportunities that will result from Hong Kong’s further development as an international financial centre and offshore renminbi centre.

“We see good reasons to do this now in our futures market but there are no plans at this time for after-hours trading in our securities market.”

Views should be submitted by July 8 to the HKEx website.