Derivatives Market

Note 1:

Although Google provides new Chrome browser versions from time to time, Participants are strongly recommended to install the above specified version at their PCs for DCASS Online.  HKEX will only base on that specified version for trouble shooting for any DCASS Online related issue.  Notwithstanding CPs are still able to connect to DCASS Online using the older version if they are not able to install the above version as scheduled by HKEX.  Please note that HKEX’s trouble shooting services may not be a full functional support if CP is using the Chrome browser versions other than the above specified version.

For details, please refer to corresponding Appendix A to HKCC Rules and Appendix G to SEOCH Procedures.

Participants should perform the below steps:

1. Go to “Settings”, select “Privacy and Security” and then click “Clear browsing data”

2. Under “Time range”, select "All time".  Then further select “Cookies and other site data” and “Cached images and files”, press "Clear data"

3. Close all windows and restart Chrome browsers

4. Input URL of DCASS Online connection and retry login

The minimum requirements for the SDNet bandwidth are as below:

There is limitation on number of rows depending on respective views of DCASS Online.  For example, the limitation on “Trade history” view is 60,000 rows; Participants are recommended to tighten the searching “to” and “from” time.

Participants who have high volume of usage on particular function should develop their own OAPI program.

If Participants have already connected to DCASS via DCASS Online at the computer, they should not open any other applications of HKEX using Google Chrome at the same computer.  Otherwise, there will be an error message “Server Error” popped up.

Participants can make use of the DCASS security features to manage passwords and access rights of their DCASS Online users.  2 DCASS Online users with full access to all available functions and 1 DCASS Administrator user will be set up for each Participant.  Participants can manage their own user access profiles and reset passwords for their DCASS Online users by the DCASS Administrator user.  For details, please refer to chapter 8 of DCASS User Guide.

Participants can connect their back-office system to DCASS using customized OAPI to enable straight-through-processing.

Participants should comply with the following password complexity requirements for their DCASS users:

Yes, Participants can only input plain English alpha-numeric characters in the following editable fields at OAPI programs:

 

Field name	Usage	For HKATS OAPI programs	For DCASS OAPI programs
“ex_client_s”	For input account	√
“exchange_info_s”	For input free text	√
“give_up_info_s”	For input free text for Order Level Give Up	√
“lei_s”	For input free text for Legal Entity Identifier	√
“give_up_text_s”	For input free text for Give Up Trade		√
“customer_info_s”	For input free text for Rectify Trade		√

If a Participant expects that it cannot complete the post-trade activities for T Session before the System Input Cutoff Time, he should contact DCASS Hotline at 2979-7222 as soon as possible.  Participant should complete and submit the duly authorized on-behalf input request forms to the Clearing Houses before System Input Cutoff Time.  The Clearing Houses would perform the input on the Participant's behalf on a best effort basis, depending on the resources available at the time.  The Clearing Houses will not accept any on-behalf input request forms submitted after the deadline of System Input Cutoff Time.

For respective System Input Cutoff Time, please refer to HKCC Rules section 101 and SEOCH Rules section 101.

On-behalf input will be subject to a charge as stipulated in the Rules and Procedures of the Clearing Houses. Processing charge for on-behalf input is $50 per transaction with a minimum charge of $500 per day.

The EOTs will be transmitted to CCASS on the date of exercise and assignment. SEOCH will not include these EOTs in calculation of margin on the date of exercise and assignment. Instead, CCASS will include those EOTs in the Provisional Clearing Statement and in the calculation of Marks, Margin and Concentration Collateral on the date when the EOTs are received from SEOCH. For those SEOCH Participants selected for SEOCH to collect and pay Marks, Margin and Concentration Collateral of EOT pending stock positions, SEOCH will effect a transfer on T+1 day for the amount demanded by HKSCC from the SEOCH Participant’s designated House CCMS Collateral Account to its corresponding HKSCC Participant’s CCMS Collateral Account.

For SEOCH Participant, trade adjustments in respect of a Block Trade shall be submitted by SEOCH Participants at any time 30 minutes prior to the System Input Cutoff Time on the same Trading Day or 30 minutes prior to the System Input Cutoff Time on the next Trading Day.  For details, please refer to SEOCH Procedures 5.4.5.

For HKCC Participant, for Block Trades executed during the T Session on a Trading Day, trade adjustment request may be submitted at any time 30 minutes prior to the System Input Cutoff Time on the same Trading Day or 30 minutes prior to the System Input Cutoff Time on the next Trading Day.  For Block Trades executed during the T+1 Session on a Trading Day, trade adjustment requests may be submitted at any time 30 minutes prior to the T+1 Session Cutoff Time on the same Trading Day or 30 minutes prior to the System Input Cutoff Time on the next Trading Day.  For details, please refer to HKCC Procedures section 1.4.1.

For respective System Input Cutoff Time, please refer to the HKCC Rules section 101 and SEOCH Rules section101.

For T+1 Session Cutoff Time, please refer to HKCC Rules Appendix B.

The details of each account type can be found in HKCC Procedures chapter 1, SEOCH Procedures chapter 1 and chapter 2 of DCASS User Guide.

Each HKCC Participant will have one COCA.  Upon the requests of HKCC Participants, Clearing House may in its absolute discretion establish and maintain more than one COCA for the HKCC Participants.  COCA is for the recording of positions of individual clients of an HKCC Participant which are of an offset nature.  The offset criteria can be found in HKCC Procedures chapter 2.  Positions in each portfolio for offset claim must belong to the same client.  Positions in COCA are maintained on a GROSS basis, but margined on a NET basis.  HKCC Participants should ensure that all positions maintained in COCA for margin offset can be reconciled with their internal records.

Upon the request of SEOCH Participants, HKEX may in its absolute discretion establish one COCA.  Positions in COCA are maintained on a GROSS basis, but margined on a NET basis.  SEOCH Participants should ensure that all positions maintained in COCA for margin offset can be reconciled with their internal records.  Margin offset through COCA must be claimed in pairs of client positions and only the position pairs fulfilling ALL the following conditions are eligible:

For respective System Input Cutoff Time, please refer to HKCC Rules section 101 and SEOCH Rules section 101.

If Participants would like to see only the trades of Stock Options market, they can make use of the "Markets" window to filter the trades.

If Participants net down a position wrongly, they CAN reverse or re-open the positions by submitting the Annulment of Position Netting requests via DCASS themselves no later than the System Input Cutoff Time on the 5th Trading Day after the original position netting was effected.

However, if the position has been netted down wrongly by trade adjustment or position transfer, Participants have to complete stipulated request forms (HKCC: Form 23; SEOCH: Form A23) and submit to the Clearing Houses no later than the System Input Cutoff Time on the 5th Trading Day after the original position netting was effected.

Participants please note that partial re-open of positions is not allowed at DCASS.  Nonetheless, Participants can submit the annulment request to re-open all positions previously net down.  When the annulment request has been approved by Clearing Houses, Participants can then perform the position net down at DCASS accordingly.

For respective System Input Cutoff Time, please refer to HKCC Rules section 101 and SEOCH Rules section 101.

For (i) and (ii), Participants can use the Cross Product Netting function in the "Account Position" window of DCASS Online to input position closing request for both auto-netting and non auto-netting accounts. Nevertheless, off-settable positions in auto-netting accounts will be automatically closed out during AB process.

For (iii), participants should submit Form 4 “On-Behalf Internal Position Adjustment Request Form” to HKCC for the position closing request for all accounts.  Off-settable positions in auto-netting accounts WILL NOT be automatically closed out during AB process.

Any trades remained in the Daily Account "DA" as at the day-end will be automatically transferred to the Sink Account during the DCASS day-end batch process. Participants are required to move out those trades from the Sink Account before the System Input Cutoff Time of the next Trading Day. A Participant can use the "Rectify Trade" function to moves out these trades to other correct account(s) within itself or give-up them to other Participants.

For respective System Input Cutoff Time, please refer to HKCC Rules section 101 and SEOCH Rules section 101.

The newly created futures position arisen from exercise events will be updated to Participants’ position account immediately during HKCC end of day processing at around 9:30 pm.

Participants can only conduct position adjustment for the newly created futures position after the HKCC end of day processing and these adjustments will be treated as the post trade of next clearing day. The newly created futures position will be included in the calculation of the end of day margin requirement on the expiry day.

For details, please refer to chapters 3.2 and 5.1 of DCASS User Guide.

The in-the-money percentage for stock options is the difference between the strike and fixing price as a percentage of the strike.  For this purpose, the fixing price of the underlying stock will be determined by SEOCH at its absolute discretion and, under normal circumstances, it will be the closing price quoted on The Stock Exchange of Hong Kong Limited of the underlying stock on the expiry day.

The exercise and assignment of stock options contracts will be performed as normal.

For any outstanding short position resulting from exercise / assignment of a stock options contract, CP who cannot fulfill their delivery obligations may apply for buy-in exemption with HKSCC.  For details please refer to CCASS Operational Procedures 10.8.3 (vi) or contact CCASS Hotline at 2979-7111.

SEOCH Participants can via DCASS Online set their own exercise criteria, in term of % or fixed value, per stock options call and/or put per account and/or per company.  For details, please refer to chapter 4 of DCASS User Guide.  The exercise criteria set by the SEOCH Participant will be applicable to ALL series within call and/or put options, with immediate effect.  Once setup in DCASS, such exercise criteria will override SEOCH’s prescribed exercise criteria and take effect immediately.

SEOCH Participants should take extra cautious and are reminded to have proper internal control when setting up their own exercise criteria in DCASS.  SEOCH Participants should review their prescribed exercise criteria and make necessary adjustments from time to time.

Manual Exercise and Deny Exercise are ONLY applicable for stock options contracts which are American-styled and physically settled options on equity securities listed on The Stock Exchange of Hong Kong Limited.

SEOCH Participants can input manual exercise requests at DCASS by themselves at any time prior to the System Input Cutoff Time on any Trading Day and expiry day.

On expiry day, SEOCH Participants can also deny exercise requests automatically generated by DCASS for any in-the-money spot month contracts which meet SEOCH’s prescribed exercise criteria. SEOCH Participants can input deny exercise request via DCASS at any time prior to the System Input Cutoff Time.  For details, please refer to chapter 4 of DCASS User Guide. For System Input Cutoff Time, please refer to SEOCH Rules section 101.

For other options contracts traded in Hong Kong Futures Exchange Limited, all in-the-money spot month contracts will be exercised by HKCC on expiry day.  Manual Exercise and Deny Exercise functions are NOT applicable.

Summary:

For HKCC, the settlement fee will be charged on any unclosed spot month futures contracts on its last trading day.
For HKCC, the exercise fee will be charged on any exercised options contracts while assignment fee will be charged on any assigned options contracts.

For SEOCH, only exercise fee will be charged on any exercised stock options contracts.

SEOCH will charge Exercise Fee only on exercised stock options contracts, no Exercise Fee is charged on assigned stock options contracts.  For physical settlement of underlying stock, Stock Settlement Fee, Trading Fee, SFC Transaction Levy, AFRC Transaction Levy, Stamp Duty on stock transaction and Transfer Deed Stamp Duty are charged.

For details of fee scale, please refer to HKEX website.

For HKCC Participants, the fees and costs applicable are listed in Apendix A to HKCC Rules.

For SEOCH Participants, the fees and costs applicable are listed in Appendix G to SEOCH Procedures .

Participants can retrieve Risk Parameter Files (RPF) and DCASS reports between 7:00 a.m. to 3:30 a.m. on each trading day directly from the Report Retrieval Solution via the secure file transfer protocol (SFTP) facility. Participants are required to ensure SFTP client software is be adhered to the SFTP standard and generate a pair of SSH keys to HKEX for registration.  For technical details of SFTP, please refer to the Report Retrieval Solution for Listed Derivatives Markets Technical Guide at Client Connect.

Participants can also download RPF from HKEX website at http://www.hkex.com.hk/tod/markinfo/riskdata.asp.

For details about DCASS report download, please refer to chapter 9 of DCASS User Guide.

Reports and data files will be available for download within 10 calendar days after report/ data file generation.  Participants should retrieve and save the reports and data files daily, to avoid subsequent report re-printing request at a cost.  For re-print of reports or retrieval of data files, Participants should submit a request form via Client Connect to HKEX, which is subject to charges.

Participants can check the details of all collateral balances and transactions via the on-line functions "Enquire Collateral Account Balance" and "Enquire Collateral Account Movement" respectively.  The CCMS day end report "Statement of Collateral Account" (CCMDS01) also contains relevant information.  In addition to balances of both cash and non-cash collateral in general, "Contract Currency On-hold" is also shown to reflect the cash amount being held for covering margin liability and therefore is not available for withdrawal.

Please refer to Appendix V of the Rules and Procedures of HKCC and Appendix I of the Operational Clearing Procedures for Options Trading Exchange Participants of SEOCH for details of how interest, costs and charges are calculated. The interest, costs and charges will be calculated daily and posted or deducted from the relevant CCMS Collateral Account on the first business day of the following month. Clearing Participants can refer to daily CCMS Report “Collateral Parameters Information List” (CCMIR02) for the rebated interest rates and monthly CCMS report “Monthly Interest & Accommodation Fee Report – Detail” (CCMIA02) for any interest, costs and charges posted or deducted.

Example:

HKD Interest Rate
HKD 1-month HIBOR interest rate: 1.98%
HKD interest rate payable to Clearing Participant: (0.5 x 1.98%) - 0.25% = 0.74%

Approved currency, other than HKD, which is not a Negative Interest Rate Currency
Based on prevailing bank saving rates, plus a spread.
Assuming the prevailing bank saving rate and spread is 0.26% and 2% respectively: Interest rate payable to Clearing Participant: 0.26% + 2% = 2.26%

Approved currency, other than HKD, which is a Negative Interest Rate Currency

Assuming cost incurred by the Clearing House for Negative Interest Rate Currency is 0.35%.
Cost charged to Clearing Participant for Negative Interest Rate Currency: 0.35% + 0.25% = 0.60%