Late nights planned for HKEx futures

The Hong Kong Exchange (HKEx) is planning to initiate after-hours futures trading (AHFT) from the second half of 2012, subject to the approval of necessary rule amendments by Special Administrative Region’s watchdog, the Securities and Futures Commission.

The proposal received widespread support when it was suggested in a May 2011 consultation paper. Almost 80% of 455 respondents – comprised of exchange and clearing participants – agreed with the introduction of the new trading hours.

HKEx initially planned late night trading of three futures contracts – Hang Seng index futures, H-shares index futures and gold futures – from 30 minutes after the current market close – 16.45 local time for the index futures and 17.30 for the gold futures – until 23.15.

A revised version of its proposal provides for 17.30 to 23.00 trading for the three proposed futures contracts, with the close of the gold futures regular trading session lowered to 16.15.

“We found strong support for after-hours futures trading in our consultation and we thank all the respondents for sharing their views with us,” said Calvin Tai, head of trading at HKEx. “We have revised our proposal to address the concerns of respondents. To give exchange and clearing participants sufficient time to prepare for after-hours futures trading by making adjustments to their systems and operations, we now tentatively aim to introduce after-hours futures trading in the second half of next year.”

HKEx has also set price limitations for after-hours futures trading. Sell orders with a price below 95 per cent of the last traded price for the spot month contract in the regular trading session and buy orders with a price above 105 per cent of the last traded price for the spot month contract in the regular trading session, will not be allowed.

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

The exchange said detailed implementation plans and schedules would be announced in due course and asked prospective futures market exchange and clearing participants to prepare their systems for market rehearsals by mid-2012.