HKEX Plans to Implement Proposed After-Hours Trading Enhancements

• Enhancements to be introduced in three phases, starting with extension of after-hours trading of index futures to 1 am from 11:45 pm
• Second and third phases include inclusion of index option contracts and extension of after-hours trading to 3 am respectively
• Changes subject to regulatory approval and market readiness

Hong Kong Exchanges and Clearing Limited (HKEX) published its consultation conclusions today (Friday) on its proposed after-hours trading (AHT) enhancements.

HKEX received a total of 53 responses from a broad spectrum of market participants including 36 Exchange Participants (EPs) and others in the market contributing 83 per cent of the volume in AHT (the T+1 Session) and 71 per cent the index options volume in the central order book for all morning and afternoon trading, one professional body/ industry association, one other institution and 15 individuals.

The majority of the respondents, 47 out of 53, or 89 per cent, supported the extension of AHT; and 49 out of 53, or 92 per cent, supported the inclusion of index options in the T+1 Session.

“We were pleased to receive responses from various market segments and to see strong support from the majority of respondents for our proposals," said Roger Lee, HKEX's Joint Chief Operating Officer and Head of Markets.  "The enhancements on the T+1 Session not only can respond to the increasing market needs for a more comprehensive range of risk management and trading tools in the session, but also are critically important for Hong Kong to maintain its position as an international financial centre.”

Having carefully considered all of the responses received, HKEX concluded that there is substantial market support for the proposed AHT enhancements and implementation roadmap.  Subject to regulatory approval, the enhancements will be introduced in the T+1 Session in three phases.

3-phase Implementation Roadmap

• Phase 1: Extension to 1:00 am from 11:45 pm of the T+1 Session for equity index futures - Hang Seng Index (HSI), H-shares Index (HHI), Mini-HSI and Mini-HHI futures - in November 2017.
• Phase 2: Inclusion of index option contracts and a trading halt mechanism for index options in the T+1 Session in the first half of 2018.
• Phase 3: Extension to 3:00 am from 1:00 am of the T+1 Session and alignment of the T+1 Session Cutoff Time (the deadline for system input of post-trade after the T+1 Session) with the close of trading hours in the fourth quarter of 2018.

The extension of after-hours trading of index futures to 1:00 am (Phase 1) is tentatively scheduled for 6 November 2017, subject to regulatory approval and market readiness.  More than three-quarters of EPs registered for the T+1 Session (111 out of 143 EPs, or
78 per cent) are: 1) currently participating in trading of HKEX’s currency or commodities products, which ends at 1 am; and/or 2) offering overseas derivatives trading services, so they should be able to support a longer T+1 Session for index futures with little or no change in their operating arrangements.

The consultation paper and consultation conclusions are available on the HKEX website along with copies of respondents’ submissions, and there’s a table in the appendix showing the current and planned T+1 Session trading hours and Cutoff Time.

Appendix 

After-Hours Trading of Index Futures and Options

¹ Extension of equity index options to 3:00 am is subject to market demand and product liquidity.

Ends