Hong Kong Exchanges and Clearing (HKEx) has re-affirmed its commitment to central clearing of OTC derivatives in its OTC clearing house and diversification of its renminbi (RMB) product offering, as well as providing details of the timetable for its ongoing Orion market data and trading platform improvements.
In interim results Wednesday, the exchange reported it had completed system development and integration testing for its new OTC clearing house for OTC derivative instruments, which will initially cover interest rate and currency swap contracts. Application testing will begin in Q3.
In addition, HKEx reconfirmed its intention to introduce a US-dollar-to-RMB futures contract this quarter. The exchange currently offers 41 debt securities, two exchange-traded funds and one real estate investment trust in RMB. Internationalisation of the RMB is one of the core planks of the venue’s five-year plan, which aims to prepare it for increasing competition from the mainland China exchanges at Shanghai and Shenzhen.
The exchange is also currently working on its Orion market data platform, which is due to be rolled out for securities market data and derivatives by the second and fourth quarter of 2013 respectively. In addition, the exchange confirmed a launch date of Q4 2013 for its Orion central gateway which provides broker access, as well as its hosting services. HKEx said the first phase of relocation to the firm’s new data centre was on track to be completed in the fourth quarter of this year.
In its results, the exchange reported average daily turnover of US$7.32 billion in the six months to 30 June 2012, representing a fall of 23% compared with a year earlier (US$9.5 billion). The number of options contracts traded on the stock exchange decreased by 20%, from 288,455 to 231,856. However, the average daily number of derivatives contracts traded on the futures exchange increased by 6%, from 250,353 to 265,609.
“Externally, the market uncertainty brought by the global economic slowdown and Europe’s sovereign debt problems continues to linger,” said Charles Li, director and chief executive, HKEx. “On one hand, now is a reasonably good time to make long-term investments. On the other hand, this is a challenging period for us because low market turnover is putting pressure on our short-term profitability. With the view that the investments we are making now are crucial to our long-term competitiveness, we are prepared to weather any short-term storms we encounter.”