Hong Kong Regulator Highlights Derivatives Market Growth and Key Initiatives
At the FOW Trading Asia 2025 conference, Hong Kong Securities and Futures Commission (SFC) Executive Director for Markets Supervision, Rico Leung, outlined the robust growth of Hong Kong's derivatives market and key measures reinforcing its role as an international risk management hub.
Key Drivers and Market Resilience
Leung noted that the market's volume and open interest have more than doubled over the past decade, with average daily turnover reaching record highs. Growth is led by flagship products like Hang Seng Index futures. He highlighted the market's resilience, evidenced by orderly functioning during significant volatility, such as when the Hang Seng Index fell 13% in a single day, demonstrating effective risk management.
Initiatives to Enhance Appeal and Efficiency
To boost international competitiveness, the SFC has introduced several key measures:
Relaxed Position Limits: Position limits for three major equity index futures and options were raised by 40% to over 100%, offering greater flexibility for large institutions.
Reduced Trading Costs: HKEX will increase interest rebates on cash collateral and reduce accommodation fees for non-cash collateral from October, lowering funding costs for holding positions.
Expanded Eligible Collateral: Chinese Government Bonds and Policy Bank Bonds are now accepted as margin for Swap Connect trades, improving capital efficiency for international investors and strengthening the offshore RMB ecosystem.
Swap Connect Development and Regulatory Balance
Leung reported strong progress for Swap Connect, with cumulative trading volume exceeding RMB 8.1 trillion. The extension of the maximum tenor for northbound swaps to 30 years provides a better hedge for long-term RMB bond holders.
In closing, Leung reiterated the SFC's balanced approach, where market development and stability are mutually reinforcing. Hong Kong is committed to fostering innovation within a robust regulatory framework to ensure a secure and efficient platform for global investors managing risk.
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