HKEX Hang Seng Index Futures
Trade Hong Kong's benchmark equity index on the Hong Kong Futures Exchange.
Hang Seng Index (HSI), the benchmark of the Hong Kong stock market, is one of the best known indices in Asia and is widely used by fund managers as their performance benchmark. The HSI is a market capitalisation-weighted index — shares outstanding multiplied by stock price — of the constituent stocks, grouped under Commerce and Industry, Finance, Properties and Utilities sub-indices. Constituent stocks with higher market capitalisation carry greater influence on the index's performance than those with lower market capitalisation.
To meet the growing interest in the Hong Kong stock market and the rising demand for related hedging tools, the Hong Kong Futures Exchange (HKFE) first introduced HSI futures contracts in May 1986. HSI futures and options provide investors with a set of effective instruments to manage portfolio risk and to capture index arbitrage opportunities, and have grown in popularity alongside increasing domestic and international investor participation.
Key Benefits
- Proven Markets
- HSI futures and options allow experienced and novice investors alike to participate in the performance of constituent stocks in the index, as a time-tested benchmark consistently used for trading and risk management purposes.
- HSI futures and options allow experienced and novice investors alike to participate in the performance of constituent stocks in the index, as a time-tested benchmark consistently used for trading and risk management purposes.
- Cost Effective
- HSI futures and options facilitate hedging activities in a cost-effective way, as contracts are traded on margin and only a fraction of the contracted value is required to carry an open position.
- HSI futures and options facilitate hedging activities in a cost-effective way, as contracts are traded on margin and only a fraction of the contracted value is required to carry an open position.
- Low Transaction Costs
- As the total value of high-capitalisation stocks represented in each contract is substantial, only one commission is charged to establish or liquidate a contract, keeping transaction costs low compared to trading the constituent stocks directly.
- As the total value of high-capitalisation stocks represented in each contract is substantial, only one commission is charged to establish or liquidate a contract, keeping transaction costs low compared to trading the constituent stocks directly.
- Clearing House Guarantee
- Contracts are registered, cleared and guaranteed by the HKFE Clearing Corporation (HKCC), which acts as counterparty to all open contracts and effectively eliminates counterparty risk between investors and their brokers.
- Contracts are registered, cleared and guaranteed by the HKFE Clearing Corporation (HKCC), which acts as counterparty to all open contracts and effectively eliminates counterparty risk between investors and their brokers.
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The standard Hang Seng Index Futures contract carries a multiplier of HK$50 per index point and trades under the code HSI on HKATS, suited to investors seeking full-scale exposure to the Hang Seng Index.
Source: HKEX
To meet the needs of retail investors with an interest in the Hong Kong stock market, the Hong Kong Futures Exchange (HKFE) introduced Mini-Hang Seng Index (Mini-HSI) Futures on 9 October 2000, complemented by Mini-HSI Options launched on 18 November 2002.
The compact Mini-HSI contracts are based on the same benchmark Hang Seng Index (HSI) underlying the larger HSI futures and options, carrying a contract multiplier of HK$10.00 — one-fifth the size of the HSI contracts — and are cash-settled in the same way. Local retail investors with less risk capital and lower hedging requirements will find Mini-HSI futures and options the most appropriate investment and hedging tools for managing their market risk.
Key Benefits
- Tailor-made for Retail Investors
- The Mini-HSI futures and option contracts inherit the advantages of the larger sized HSI contracts but are tailored for individuals with limited risk capital. The smaller contract size allows experienced and novice investors alike to participate in the performance of the constituent stocks in the index on a graduated scale.
- The Mini-HSI futures and option contracts inherit the advantages of the larger sized HSI contracts but are tailored for individuals with limited risk capital. The smaller contract size allows experienced and novice investors alike to participate in the performance of the constituent stocks in the index on a graduated scale.
- Low Costs
- As the Mini-HSI contracts are one-fifth the size of the HSI contracts, the corresponding margin requirements and commission are much lower.
- As the Mini-HSI contracts are one-fifth the size of the HSI contracts, the corresponding margin requirements and commission are much lower.
- Margin Offset
- One hundred per cent margin offset between Mini-HSI and HSI futures, and between Mini-HSI and HSI options, allows for flexible investment management.
- One hundred per cent margin offset between Mini-HSI and HSI futures, and between Mini-HSI and HSI options, allows for flexible investment management.
- Electronic Trading Platform
- Like all other products traded on the Exchange, Mini-HSI futures and option contracts trade electronically on HKATS, where all orders are matched based on price and time priority. Bid, offer and transaction prices are disseminated in real time to the public, providing the highest level of price and market transparency.
- Like all other products traded on the Exchange, Mini-HSI futures and option contracts trade electronically on HKATS, where all orders are matched based on price and time priority. Bid, offer and transaction prices are disseminated in real time to the public, providing the highest level of price and market transparency.
- Clearing House Guarantee
- Mini-HSI futures and options are registered, cleared and guaranteed by the HKFE Clearing Corporation (HKCC), a wholly-owned subsidiary of the HKFE. The HKCC acts as counterparty to all open contracts, effectively eliminating counterparty risk between HKCC Participants. The HKCC guarantee does not cover an HKCC Participant's obligations to its clients; investors should exercise due care and diligence when deciding through whom they will conduct business.
- Mini-HSI futures and options are registered, cleared and guaranteed by the HKFE Clearing Corporation (HKCC), a wholly-owned subsidiary of the HKFE. The HKCC acts as counterparty to all open contracts, effectively eliminating counterparty risk between HKCC Participants. The HKCC guarantee does not cover an HKCC Participant's obligations to its clients; investors should exercise due care and diligence when deciding through whom they will conduct business.
Source: HKEX
