Hang Seng Index Futures Options

Introduction

Hang Seng Index (HSI) Futures Options are designed for global investors to execute derivative trading strategies on Hong Kong equity. The contracts complement HKEX’s HSI derivatives suite enabling investors to trade and hedge with great flexibility.

Hang Seng Index

The benchmark of the Hong Kong stock market

Hang Seng Index, the leading barometer of Hong Kong stock market, is one of the best known indices in Asia and is widely used by fund managers as their performance benchmark. Since its introduction on 24 November 1969, regular adjustments of HSI constituent stocks have been made to reflect the importance of different industry sectors and to keep track of the closer economic ties between Hong Kong and Mainland China. Despite the enormous growth in the Hong Kong stock market over the years, the HSI has been proven to be an effective tool to track the overall performance of the Hong Kong stock market.

Comprehensive product ecosystem

HSI is used as the base index for a wide variety of derivatives products. HSI futures (introduced in May 1986) and options (introduced in March 1993) have become very popular with increasing domestic and international investors’ participation. Together with Flexible HSI Options, Weekly HSI Options, and Mini-HSI Futures and Options, these contracts provide investors with a set of effective instruments to manage risks in Hong Kong equity portfolios.

Related Circulars:

Introduction of Physically Settled Options Contracts on Hang Seng Index Futures and Hang Seng China Enterprises Index Futures
Introduction of Physically Settled Options Contracts on Hang Seng Index Futures and Hang Seng China Enterprises Index Futures on 23 August 2021
Frequently Asked Questions – Position Limits and Large Open Position (“LOP”) Reporting on Physically Settled Options on Futures Contracts
Appointment of Primary Market Makers and Finalised Trading Arrangements for Physically Settled Option Contracts on Hang Seng Index Futures and Hang Seng China Enterprises Index Futures

Press Release

Derivatives Market Access Codes

NOTICE:

Participants should ensure the following before engaging in trading or offering Options on Futures products to clients:

• Ensure systems (including front office and back office systems) and operational readiness and complete a Readiness Test successfully in the HKEX testing environment. 
• Necessary measures taken to ensure the end users/clients understand the settlement mechanism and risk involved in the new product (e.g. Client-facing staff / clear client interface and client education).
• Thorough and effective communication made to the clients prior to offering, specifically, on the differences between Options on Index and Options on Futures products.
• Similar to all physically-settled options, an option position holder should be aware that the final P&L of such position would be affected by the price of the underlying asset.
• There may be cases where the delivered position will incur immediate mark-to-market gain/loss (the price of delivered position may not be the same as official settlement price).
•  Participants who do not wish positions to settle into futures could opt to square their positions before expiry or consider the cash-settled Options on Index.
•  Participants should closely monitor and manage their risk at all times.