The Hong Kong Exchanges and Clearing Limited (HKEx) has announced plans to revamp its stock options market in a wide variety of areas thanks to its growing interest. Taking effect on May 2, this will include product design and market making fee changes, reported Tax-News.com.
Romnesh Lamba, HKEx’s Co-Head of Global Markets said,?”We are revamping our stock options to capture new opportunities created by regulatory changes that have increased demand for exchange-traded derivatives and central counterparty clearing. With the measures, we believe we can increase our stock option market’s attractiveness to existing users of the over the counter option-like instruments.”
From the facelift, HKEx will look to see greater market liquidity and benefits for both retail and institutional investors.?
First up for the revamp is trading fee cuts that will hit 26 stock option classes. This will include a 50% reduction as the the new trading fee will be $50 per contract for stock options with a less than a $100 notional value.?
Then there’s improved market making with new Primary Market Makers (PMMs).
They will provide ?quotes in at least 120 series per option class–this is five times the quote requirement for current market makers, according to Tax-Law. Phase one of this program will start in the second quarter and encompass five active stock options representing more than 20% of the current trading volume in the equity options market.
This includes AIA, China Life Insurance, China Mobile, CNOOC and HSBC.
Expiration months will include a new fourth serial month. This will now encompass the spot month, the following three calendar months and the following next three quarter months. ?
Subscriber fees for real-time stock option prices will now be waived for a year to ?incite participants to place stock option prices on either their websites or trading terminals to spur investor interest.
According to the World Federation of Exchanges statistics, HKEx is a top Asian exchange for equity options trading. Its average daily trading volume at the exchange in January and February 2013 was 287,500 contracts, up 18 times since 2002. Equity options are the most actively exchange-traded derivative in Hong Kong, reported Tax-Law.