Hong Kong Exchanges and Clearing Limited (HKEX) has had a very busy and productive 2023, marked by the achievement of several significant milestones and the launch of new initiatives. This included the opening of new offices in New York and London, strategically positioning the business across all major global time zones to be closer to its clients. The focus on derivatives, fixed-income and currency products has also been instrumental in further diversifying HKEX's business and product ecosystem, giving investors and risk managers even greater choice.

Throughout the year, HKEX introduced a range of notable new projects and initiatives, further enhancing the Group’s offering and reinforcing Hong Kong's role as a leading international financial centre.

Despite the continued complexity of the macroeconomic landscape, Hong Kong's financial markets have continued to demonstrate resilience and strength, reinforcing its relevance and role as a vital global superconnector. This year, HKEX signed MOUs with the Beijing Stock Exchange, the Indonesia Stock Exchange (IDX) and the Saudi Tadawul Group, to explore dual-listing opportunities and joint product development, capitalising on deeper business ties with Mainland China, Southeast Asia and the Middle East. Both IDX and the Saudi Exchange have then been added to the list of Recognised Stock Exchanges, allowing for potential secondary listings on HKEX.

HKEX's derivatives market had a strong year with average daily volume of 1.4 million contracts as at 30 November, up 4 per cent from a year earlier. Notably, HKEX’s MSCI futures and options products saw open interest exceed 100,000 contracts for the first time in November, with nominal value of US$4.2 billion. Meanwhile, key products such as Hang Seng Index Futures Options, Hang Seng TECH Index Futures, and USD/CNH Futures set daily trading records during the year.

The Exchange Traded Products (ETPs) market, including ETFs and L&I Products, has also gone from strength-to-strength with average daily turnover reaching $14 billion as at the end of November, an increase of around 20 per cent from a year earlier. During the year, HKEX welcomed Asia Pacific's first Saudi Arabian ETF, part of the 16 new ETFs introduced in 2023, bringing the total to 179.

HKEX's Connect franchise has seen ongoing enhancements, including: the addition of up to 10 trading days, the inclusion of 1,000 more stocks for Northbound Connect, and the inclusion of international companies for Southbound Connect. Additionally, Swap Connect and the HKD-RMB Dual Counter programme were introduced to strengthen Hong Kong's position as a leading offshore RMB hub. The upcoming introduction of China Treasury bond futures, and the A50 options, will further solidify Hong Kong’s status as an international RMB trading centre.

For 2023, the global IPO market continued to be impacted by soft market sentiment and the broader macroeconomic backdrop. Whilst this impacted Hong Kong’s markets, there was continued momentum in listings during the year. In 2023, HKEX welcomed 64 new listings, raising $40.9 billion as of 15 December*. Throughout the year, HKEX remained committed to further enhancing its attractiveness and competitiveness as a listing venue of choice, and to this end, launched a consultation paper on severe weather trading, concluded discussions on GEM reform and introduced a new chapter for specialist technology companies. These reflected the Group’s commitment to fostering a robust and dynamic marketplace.

In addition to new reforms and listing rules, HKEX introduced several operational enhancements, such as the launch of the FINI and Synapse platforms, providing greater convenience and transparency for market participants. The FINI platform reduces the time between the pricing of an IPO and the trading of shares from at least five business days to two business days, while the Synapse platform supports institutional investors participating in Northbound Stock Connect to better manage their post-trade operations across different time zones.

HKEX is fully committed to ESG governance, disclosure and investment opportunities. In November, HKEX reaffirmed its commitment to this cause by pledging to achieve Group carbon neutrality by 2024 and net zero by 2040, a decade earlier than previously planned. As a regulator, HKEX published a consultation paper on climate disclosure enhancements to facilitate listed companies in transitioning to full adoption of standards from the International Sustainability Standards Board. HKEX’s voluntary carbon market platform, Core Climate, has also gained momentum with registered participants tripling over the past year to around 80 members. To further promote green development in the region, HKEX signed an MOU with the China Emissions Exchange Shenzhen and the China Beijing Green Exchange to jointly explore opportunities in cross-border carbon market connectivity and climate finance. These actions demonstrate the Group’s objective to address climate change promptly.

As a purpose-driven organisation with a unique role in connecting markets and the wider community, HKEX partnered with the FII Institute and the HKSAR Government to bring the FII PRIORITY summit to Asia for the first time in December. The summit featured over 100 exceptional speakers drawn from industry, government and academia; it attracted roughly 1,000 attendees from around the world. This well-received event demonstrated HKEX’s ongoing commitment to global connectivity and strengthening ties with Middle East investors and markets.

The London Metal Exchange (LME) also had a good year, with volumes trending upwards over the last few months. In November, the average daily volume reached its highest level since May 2021 and open interest was up 17 per cent year-on-year. The positive outcome of a judicial review related to events in the nickel market in March 2022 demonstrated the integrity of the LME team, which has consistently prioritised the interests of the market as a whole.

HKEX Chief Executive Officer Nicolas Aguzin said: “HKEX has made significant progress this year, despite a challenging macro backdrop. Our derivatives market has performed strongly and is now taking centre stage as HKEX’s market diversification efforts pay off, supporting the strong financial performance of the Group as reflected by the robust reported results during 2023. Our new overseas offices in New York and London, as well as our engagement programme in the Middle East and Southeast Asia, underscore our commitment in delivering on our international strategy. Over the past year, we have launched more Connect-related initiatives and enhancements than in any of the previous eight years, strengthening Hong Kong’s role as the superconnector between China and the world. The introduction of new listing rules for specialist technology companies and the FINI platform are major milestones that will shape the future of capital markets in the region and beyond.”

He added: “On behalf of HKEX, I would like to thank our customers, business partners, regulators and our community in Hong Kong, Mainland China and around the world for their strong support throughout the past year. The business is excited by what lies ahead, which includes consultation conclusions on severe weather trading, the launch of China Treasury Bond Futures and the implementation of block trading under Stock Connect. We have no doubt that 2024 will be another year of great possibility and connectivity.”

Here is a look back at some of the year’s highlights:

Corporate & Strategic Highlights

·Celebrated the opening of two international offices - in New York and London, providing on-the-ground support to the Group’s clients in North America and Europe

·Signed MOUs with international exchange partners including Saudi Tadawul Group, Indonesia Stock Exchange and Beijing Stock Exchange

·Celebrated the 30th anniversary of H-share listings in Hong Kong

·Partnered with FII Institute and the HKSAR Government to host Asia’s first FII Priority Summit in HKEX Connect Hall

·Proposed a way forward for continuation of trading in severe weather conditions, reinforcing Hong Kong’s competitiveness as an international financial centre

·Committed to achieving Group carbon neutrality by 2024 and net zero by 2040

·LME launched its new Action Plan to strengthen and enhance its markets – it is on track to fulfil objectives and has implemented changes including the evolution of the closing price methodology and enhancements to the scope of off-warrant stock reporting

·The UK Courts rule in favour of the LME in respect of the events in the nickel market in 2022

Listing and IPOs

·Added a new Listing Chapter 18C to allow Specialist Technology Companies to seek listing in Hong Kong

·Confirmed the implementation of GEM reforms in 2024 with a new listing route and an introduction of a Main Board transfer mechanism

·Included the Indonesia Stock Exchange and Saudi Exchange to the list of Recognised Stock Exchanges, allowing eligible companies on these markets to seek secondary listing in Hong Kong

·Conducted various reforms to enhance the overall attractiveness of Hong Kong’s listing framework: implementation of Double Dipping reform, expansion of Paperless Regime in 2024 and a proposal to introduce a new treasury share regime.

·Proposed to enhance climate-related disclosures to observe the ISSB Adoption Guide

·IPO fundraising remained in line with global trend, with 64 new listings raising $40.9 billion this year*

Connect Programmes

·Welcomed the expansion of Stock Connect – inclusion of Hong Kong primary listed international companies to Southbound trading and addition of over 1,000 new underlying stocks in Northbound trading

·Launched Swap Connect, the world’s first derivatives mutual market programme, to facilitate greater international participation in China’s fixed-income market through interest rate swaps

·Announced additional trading days and the introduction of block trading under Stock Connect

·Introduced Synapse, a new settlement acceleration platform for Stock Connect, supporting institutional investors participating in Northbound Stock Connect to cope with Mainland securities market’s T+0 settlement cycle

Products and Market Operations

·Launched the HKD-RMB Dual Counter Model and Dual Counter Market Making Programme, with an initial 24 Hong Kong-listed companies offering both HKD and RMB counters

·HKEX’s digitalised IPO settlement platform FINI went live on 22 November, shortening the time between the pricing of an IPO and the trading of shares from five business days to two business days

·Announced plans to launch China Treasury Bond Futures in Hong Kong

·Announced the development of an integrated fund platform for the distribution of retail funds, supporting Hong Kong’s continued role as a regional and global wealth management centre.

·Welcomed the listing of Asia Pacific’s first Saudi Arabian ETF in Hong Kong

·Expanded the list of eligible underlying assets for derivatives warrant issuance with 8 new US-listed stocks, further strengthening Hong Kong market’s international product offering

·Implemented the enhancements to derivatives market position limits

·Introduced a new enterprise market data subscription option and reviewed the mobile market data service fee 

HKEX Foundation, Corporate Social Responsibility and ESG

·HKEX Foundation has donated and committed HK$95 million this year, supporting more than 36 projects and directly benefitting over 250,000 people in need in our community and in support of the environment

·Launched HKEX Impact Funding Scheme 2023, HKEX Charity Partnership Programme 2023, University Scholarship Programme and HKEX Research Funding Scheme

·HKEX employees contributed over 1,700 volunteer hours to support various good causes in the community

·Signed an MOU with the China Emissions Exchange Shenzhen and the China Beijing Green Exchange respectively to promote green development and climate finance in the region

·LME’s responsible sourcing requirements fully adopted by all its listed brands by 31 December 2023

·LME made charitable donations of more than GBP100,000 in 2023

Market Statistics for the period from 1 January to 30 November 2023 is now available on the HKEX website.

Note:

* As of 15 December, including transfers from GEM to Main Board