Introduction
HKEX’s derivatives market has both Market Maker (MM) Program and / or Liquidity Provider (LP) Program for different derivatives products. The MM obligations and MM incentives under the MM Program for futures contracts and index options contracts are set out in the HKFE Rules. The MM obligations and MM incentives under the MM Program for stock options contracts are set out in the Options Trading Rules of the Stock Exchange. LP Program is a commercial arrangement for the Exchange to appoint LPs to provide liquidity for new products, which require more flexibility in terms of LP obligations and LP incentives and are not stipulated in the exchange rules and procedures.
The derivatives products with MM Program and / or LP Program are as follows:
|
Product Type
|
Contract
|
MM Program
|
LP Program
|
|
Futures Contracts
|
Stock Index Futures
|
HSI Volatility Index Futures
HSI Dividend Point Index Futures
HSCEI Dividend Point Index Futures
Hang Seng Mainland Oil & Gas Index Futures
Hang Seng Mainland Banks Index Futures
Hang Seng Mainland Properties Index Futures
Hang Seng Index (Gross Total Return) Index Futures
Hang Seng Index (Net Total Return) Index Futures
Hang Seng China Enterprises Index (Gross Total Return Index) Futures
Hang Seng China Enterprises Index (Net Total Return Index) Futures
Hang Seng HSTECH Options |
MSCI Asia ex Japan Net Total Return (USD) Index Futures
MSCI Asia ex Japan Net Total Return (USD) Index Futures Calendar Spread
MSCI Taiwan (USD) Index Futures
MSCI Taiwan (USD) Index Futures Calendar Spread
MSCI Taiwan Net Total Return (USD) Index Futures
MSCI Taiwan Net Total Return (USD) Index Futures Calendar Spread
MSCI Japan Net Total Return (USD) Index Futures
MSCI Japan Net Total Return (USD) Index Futures Calendar Spread
MSCI India Net Total Return (USD) Index Futures
MSCI India Net Total Return (USD) Index Futures Calendar Spread
MSCI Indonesia Net Total Return (USD) Index Futures
MSCI Indonesia Net Total Return (USD) Index Futures Calendar Spread
MSCI Thailand Net Total Return (USD) Index Futures
MSCI Thailand Net Total Return (USD) Index Futures Calendar Spread
MSCI Malaysia Net Total Return (USD) Index Futures
MSCI EM Asia Net Total Return (USD) Index Futures
MSCI EM Asia Net Total Return (USD) Index Futures Calendar Spread
MSCI Hong Kong Net Total Return (USD) Index Futures
MSCI Philippines Net Total Return (USD) Index Futures
MSCI Emerging Markets Net Total Return (USD) Index Futures
MSCI Emerging Market Net Total Return (USD) Index Futures Calendar Spread
MSCI Emerging Markets (USD) Index Futures
MSCI Emerging Markets (USD) Index Futures Calendar Spread
MSCI Taiwan 25/50 (USD) Index Futures
MSCI Taiwan 25/50 (USD) Index Futures Calendar Spread
MSCI Singapore Free (SGD) Index Futures
MSCI Taiwan (USD) Index Futures Calendar Spread
MSCI Taiwan 25/50 (USD) Index Futures Calendar Spread
MSCI China (USD) Index Futures
MSCI China Net Total Return (USD) Index Futures
MSCI China Net Total Return (USD) Index Futures Calendar Spread
MSCI China A 50 Connect (USD) Index Futures Calendar Spread
MSCI China A 50 Connect (USD) Index Futures
MSCI India (USD) Index Futures
MSCI India (USD) Index Futures Calendar Spread
|
|
Stock Futures
|
Single Stock Futures
|
N/A |
|
Currency Futures
|
USD/CNH Futures
EUR/CNH Futures
JPY/CNH Futures
AUD/CNH Futures
CNH/USD Futures
|
USD/CNH Futures
EUR/CNH Futures
JPY/CNH Futures
AUD/CNH Futures
CNH/USD Futures
INR/USD Futures
INR/CNH Futures
|
|
Interest Rate Futures
|
1-month HIBOR Futures
3-month HIBOR Futures
|
N/A
|
Option Contracts
|
Stock Index Options
|
Hang Seng Index (HSI) Options
Hang Seng Index Futures Options
Weekly Hang Seng Index (WHSI) Options
Mini-Hang Seng Index (Mini-HSI) Options
Hang Seng China Enterprises Index (HSCEI) Options
Hang Seng China Enterprises Index Futures Options
Weekly Hang Seng China Enterprises Index (WHSCEI) Options
Mini-Hang Seng China Enterprises Index (Mini-HSCEI) Options
Hang Seng TECH Index (HTI) Options
Hang Seng TECH Index Futures Options
|
N/A
|
| Stock Options |
Single Stock Options |
N/A |
| Currency Options |
N/A |
USD/CNH Options |
Quota for Liquidity Providers on HKFE products
|
Contracts
|
Tier
|
Session
|
Total Quota
|
Remaining Quota
|
|
Basket of MSCI Index Futures:
T Session: 15 MSCI Index Futures
T+1 Session: 7 MSCI Index Futures
Calendar Spread: 10 MSCI Index Futures
|
1
|
T , T+1 & Calendar Spread
|
|
0
|
|
MSCI Taiwan (USD) Index Futures
|
2
|
T
|
5
|
0
|
|
3
|
T+1
|
3
|
0
|
|
MSCI Taiwan (USD) Index Futures - Calendar Spread
|
2
|
T
|
3
|
0
|
Eligibility
|
Product Type
|
MM
|
LP
|
|
HKFE Futures Contracts and
Option Contracts
|
-
HKFE Exchange Participant (EP), or
-
Corporate entity as client of EP must has an association to the EP and also must meet at least one of the requirements:
i) be a regulated entity by the Securities and Futures Commission (SFC) to deal in securities or futures contracts, except as an introducing agent ; or licensed for similar activity by an overseas authority having a Memorandum of Understanding with SFC;
Ii) be a licensed bank;
Iii) have a credit rating of A- or above (S&P) or A3 or above (Moody’s); or
iv) have a minimum paid-up capital of HK$50 mil. and minimum shareholder funds of HK$100 mil.
|
HKFE Exchange Participant or the client of the Exchange Participant
|
|
SEHK Stock Options
|
Option Trading Exchange Participant
(Affiliates of Option Trading Exchange Participant can be stock options Market Maker via the Option Trading Exchange Participant as its agent) |
N/A
|
For the List of Market Makers/ Liquidity Provider
Please refer the hyperlink below:
https://www.hkex.com.hk/Products/Listed-Derivatives/Market-Maker-Program/List-of-Market-Makers_Liquidity-Providers?sc_lang=en
LP and market making obligations and incentives
The following tables summarise the market making obligations and incentives in futures and options contracts:
Stock Index Futures (Except Sector Index Futures, Dividend Point Index Futures, Volatility Index Futures and HSI and HSCEI Total Return Index Futures, please refer the tables below for the requirements)
Market Making
Obligation
|
Provision of
Continuous Quotes (CQ)
|
Response to
Quote Requests (QR)
|
|
Assigned Contract |
Not less than 2 contract months
[i.e. Spot month and the next calendar month] |
All contract months
|
|
Trading Requirement |
Provision of CQ for not less than
70% of the trading hours in each calendar month
|
Response to not less than 70%
of the QR in each calendar month |
Maximum Time Limit for Responding to QR
|
N/A |
Response to a QR within 20 seconds of the QR |
|
Minimum Display Time |
Not fewer than 10 seconds, unless a change in the level of the underlying index occurs during the 10 seconds display period, in which case, market makers may change their quotes
|
|
Maximum Bid/Offer Spread |
Not greater than 15 minimum fluctuations
|
Minimum Quote Size
|
Not fewer than 5 contracts |
Sector Index Futures
Market Maker Obligations
Market Making
Obligation |
Provision of
Continuous Quotes (CQ) |
Response to
Quote Requests (QR) |
|
Assigned Contract |
Not less than 2 contract months
[i.e. Spot month and the next calendar month] |
All contract months
|
|
Trading Requirement |
Provision of CQ for not less than
70% of the trading hours in each calendar month
|
Response to not less than 70%
of the QR in each calendar month |
Maximum Time Limit for Responding to QR
|
N/A |
Response to a QR within 20 seconds of the QR |
|
Minimum Display Time |
Not fewer than 10 seconds, unless a change in the level of the underlying index occurs during the 10 seconds display period, in which case, market makers may change their quotes
|
|
Maximum Bid/Offer Spread |
|
Hang Seng Mainland Oil & Gas Index Futures
|
4 Index points or 0.2% of bid price, whichever is higher
|
|
Hang Seng Mainland Banks Index Futures
|
6 Index points or 0.2% of bid price, whichever is higher
|
|
Hang Seng Mainland Properties Index Futures
|
7 Index points or 0.2% of bid price, whichever is higher
|
|
Minimum Quote Size
|
Not fewer than 5 contracts |
Dividend Index Point Futures
Market Making
Obligation |
Provision of
Continuous Quotes (CQ) |
Response to
Quote Requests (QR) |
|
Assigned Contract |
All five yearly contracts
|
|
Trading Requirement |
Provision of CQ for not less than 70% of the trading hours in each calendar month |
Response to not less than 70% of the QR in each calendar month |
|
Maximum Time Limit for Responding to QR |
N/A |
Response to a QR within 20 seconds of the QR |
|
Minimum Display Time |
Not fewer than 10 seconds, unless a change in the level of the underlying index occurs during the 10 seconds display period, in which case, market makers may change their quotes |
|
Maximum Bid/Offer Spread |
30.00 points or 10% of bid price, whichever is higher |
|
Minimum Quote Size |
50 contracts |
HSI Volatility Index Futures
Market Making
Obligation
|
Provision of
Continuous Quotes (CQ)
|
Response to
Quote Requests (QR)
|
|
Assigned Contract |
All contract months
(Spot month and the next two calendar months)
|
|
Trading Requirement |
Provision of CQ for not less than
70% of the trading hours in each calendar month
|
Response to not less than 70%
of the QR in each calendar month |
Maximum Time Limit for Responding to QR
|
N/A |
Response to a QR within 20 seconds of the QR |
|
Minimum Display Time |
Not fewer than 10 seconds, unless a change in the level of the underlying index occurs during the 10 seconds display period, in which case, market makers may change their quotes
|
Maximum Bid/Offer Spread
|
0.50 points or 5% of bid price, whichever is
higher
|
Minimum Quote Size
|
Not fewer than 5 contracts |
Hang Seng Index and Hang Seng China Enterprises Index Total Return Index Futures
Obligation |
Provision of
Continuous Quotes (CQ) |
Response to
Quote Requests (QR) |
| Assigned Contract |
Not less than 2 contract months
[i.e. Spot month and the next calendar month] |
All contract months
|
| Trading Requirement |
Provision of CQ for not less than
70% of the trading hours in each calendar month
|
Response to not less than 70%
of the QR in each calendar month |
Maximum Time Limit for Responding to QR
|
N/A |
Response to a QR within 20 seconds of the QR |
| Minimum Display Time |
Not fewer than 10 seconds, unless a change in the level of the underlying index occurs during the 10 seconds display period, in which case, market makers may change their quotes
|
| Maximum Bid/Offer Spread |
| Hang Seng Index (Gross Total Return Index) Futures Contracts |
600.00 Index points or 1% of bid price, whichever is higher |
| Hang Seng Index (Net Total Return Index) Futures Contracts |
600.00 Index points or 1% of bid price, whichever is higher |
| Hang Seng China Enterprises Index (Gross Total Return Index) Futures Contracts |
200.00 Index points or 1% of bid price, whichever is higher |
| Hang Seng China Enterprises Index (Net Total Return Index) Futures Contracts |
200.00 Index points or 1% of bid price, whichever is higher |
|
Minimum Quote Size
|
1 contract |
Stock Index Options
(Excluding Weekly Index Options)
There are three types of market makers in HKEX’s stock index options market:
- Primary Market Maker (PMM);
- Market maker providing continuous quotes (CQMM); and
- Market maker responding to quote request (QRMM).
For details of PMM Program, please refer to the hyperlink below:
http://www.hkex.com.hk/eng/market/dv_tradfinfo/pmm.htm
Below is a summary of the CQMM and QRMM program (T Session):
Market Making
Obligation
|
Provision of
Continuous Quotes (CQ)
|
Response to
Quote Requests (QR)
|
|
Assigned Series |
Not less than 50 option series*
(except that, not less than 25 option series for Mini-Hang Seng Index Options and Mini-HSCEI Index Options**) |
All QR issued (except for QR in long dated index options) |
|
Trading Requirement |
Provision of CQ not less than 70%
of the trading hours in each calendar month
|
Response to not less than 70%
of the QR in each calendar month |
Maximum Time Limit for
Responding to QR
|
N/A |
Response to a QR within 20
seconds of the QR |
|
Minimum Display Time |
Not less than 20 seconds, unless a change in the price level of the Spot Month Futures Contracts of the underlying index occurs during the 20 seconds display period, in which case, market makers may change their quotes
|
Maximum bid/offer spread
(Except for Long Dated Index Options) |
For HSI Options, HSCEI Options and HS TECH Index Options:
|
Month
|
Price
|
Max. bid/offer spread
|
|
1st, 2nd, 3rd, 4th calendar
|
1-750 points
|
Max (30 points, 10% of bid)
|
|
> 750 points
|
75 points
|
|
1st , 2nd quarter
|
1-750 points
|
Max (40 points, 20% of bid)
|
|
> 750 points
|
150 points
|
|
3rd quarter
|
1-750 points
|
Max (50 points, 25% of bid)
|
|
> 750 points
|
200 points
|
For Mini-HSI Options and Mini-HSCEI Options:
|
Month
|
Price
|
Max. bid/offer spread
|
|
1st, 2nd calendar
|
1-750 points
|
Max (30 points, 10% of bid)
|
|
> 750 points
|
75 points
|
|
1st quarter
|
1-750 points
|
Max (40 points, 20% of bid)
|
|
> 750 points
|
150 points
|
|
2nd quarter
|
1-750 points
|
Max (40 points, 20% of bid)
|
|
> 750 points
|
150 points
|
|
Minimum Quote Size
|
For HSI Options, HSCEI Options and HSTECH index Options
|
Month
|
Min. Quote Size
|
|
1st, 2nd, 3rd, 4th calendar
|
5 contracts
|
|
1st , 2nd, 3rd quarter
|
3 contracts
|
For Mini-HSI Options and Mini-HSCEI Options
|
Month
|
Min. Quote Size
|
|
1st , 2nd calendar
|
5 contracts
|
|
1st , 2nd quarter
|
3 contracts
|
|
* For HSI Options, HSCEI Options and HS TECH Index Options, CQMM should provide bid/offer quotes in at least 50 option series chosen from the following selection pool:
|
Contract Month
|
Option Series
|
Series For Selection
|
|
|
|
Call
|
Put |
|
Spot month
|
Out-of-the-Money
|
15
|
15
|
|
In-the-Money
|
2
|
2
|
|
2nd Calendar Month
|
Out-of-the-Money
|
15
|
15 |
|
In-the-Money
|
2
|
2
|
|
3rd Calendar Month
|
Out-of-the-Money
|
15 |
15
|
|
In-the-Money
|
2
|
2
|
|
4th Calendar Month
|
Out-of-the-Money
|
10
|
10
|
|
In-the-Money
|
2
|
2
|
|
1st Quarter Month
|
Out-of-the-Money
|
10 |
10
|
|
In-the-Money
|
2
|
2
|
|
2nd Quarter Month
|
Out-of-the-Money
|
10
|
10
|
|
In-the-Money
|
2
|
2
|
|
3rd Quarter Month
|
Out-of-the-Money
|
10
|
10 |
|
In-the-Money
|
2
|
2
|
|
Total
|
198
|
** For Mini-HSI Options and Mini-HSCEI Options, CQMM should provide bid / offer quotes in at least 25 option series chosen from the following selection pool:
|
Contract Month
|
Option Series
|
Series For Selection
|
|
|
|
Call
|
Put
|
|
Spot month
|
Out-of-the-Money
|
15
|
15
|
|
In-the-Money
|
2
|
2
|
|
2nd Calendar Month
|
Out-of-the-Money
|
15
|
15
|
|
In-the-Money
|
2
|
2
|
|
1st Quarter Month
|
Out-of-the-Money
|
10
|
10
|
|
In-the-Money
|
2
|
2
|
|
2nd Quarter Month
|
Out-of-the-Money
|
10
|
10
|
|
In-the-Money
|
2
|
2
|
|
Total
|
116 |
Below is a summary of the CQMM and QRMM program (T +1 Session):
|
Market Making
Obligation
|
Provision of
Continuous Quotes (CQ)
|
Response to
Quote Requests (QR)
|
|
Assigned Series
|
Not less than 50 option series* (except that, not less than 25 option series for Mini-Hang Seng Index Options **)
|
All QR issued (except for QR in long dated index options)
|
|
Trading Requirement
|
Provision of CQ not less than 35%
of the trading hours in each calendar month
|
Response to not less than 35%
of the QR in each calendar month
|
|
Maximum Time Limit for
Responding to QR
|
N/A
|
Response to a QR within 20
seconds of the QR
|
|
Minimum Display Time
|
Not less than 20 seconds, unless a change in the price level of the Spot Month Futures Contracts of the underlying index occurs during the 20 seconds display period, in which case, market makers may change their quotes
|
|
Maximum bid/offer spread
(Except for Long Dated Index Options)
|
For HSI Options, HSCEI Options and HSTECH Options:
|
Month
|
Price
|
Max. bid/offer spread
|
|
1st, 2nd, 3rd, 4th calendar
|
1-750 points
|
Max (40 points, 20% of bid)
|
|
> 750 points
|
150 points
|
|
1st ,2nd quarter
|
1-750 points
|
Max (60 points, 30% of bid)
|
|
> 750 points
|
225 points
|
|
3rd quarter
|
1-750 points
|
Max (80 points, 40% of bid)
|
|
> 750 points
|
300 points
|
For Mini-HSI Options:
|
Month
|
Price
|
Max. bid/offer spread
|
|
1st, 2nd calendar
|
1-750 points
|
Max (40 points, 20% of bid)
|
|
> 750 points
|
150 points
|
|
1st quarter
|
1-750 points
|
Max (60 points, 30% of bid)
|
|
> 750 points
|
225 points
|
|
2nd quarter
|
1-750 points
|
Max (60 points, 30% of bid)
|
|
> 750 points
|
225 points
|
|
|
Minimum Quote Size
|
For HSI Options, HSCEI Options and HSTECH Options
|
Month
|
Min. Quote Size
|
|
1st, 2nd, 3rd, 4th calendar
|
3 contracts
|
|
1st ,2nd, 3rd quarter
|
2 contracts
|
For Mini-HSI Options
|
Month
|
Min. Quote Size
|
|
1st, 2nd calendar
|
3 contracts
|
|
1st ,2ndquarter
|
2 contracts
|
|
* For HSI Options, HSCEI Options and HSTECH Options , CQMM in the T+1 Session should provide bid/offer quotes in at least 50 option series chosen from the following selection pool:
|
Contract Month
|
Option Series
|
Series For Selection
|
|
|
Call
|
Put
|
|
Spot month
|
Out-of-the-Money
|
15
|
15
|
|
In-the-Money
|
2
|
2
|
|
2ndCalendar Month
|
Out-of-the-Money
|
15
|
15
|
|
In-the-Money
|
2
|
2
|
|
3rdCalendar Month
|
Out-of-the-Money
|
15
|
15
|
|
In-the-Money
|
2
|
2
|
|
4th Calendar Month
|
Out-of-the-Money
|
10
|
10
|
|
In-the-Money
|
2
|
2
|
|
1st Quarter Month
|
Out-of-the-Money
|
10
|
10
|
|
In-the-Money
|
2
|
2
|
|
2nd Quarter Month
|
Out-of-the-Money
|
10
|
10
|
|
In-the-Money
|
2
|
2
|
|
3rd Quarter Month
|
Out-of-the-Money
|
10
|
10
|
|
In-the-Money
|
2
|
2
|
|
Total
|
198
|
** For Mini-HSI Options, CQMM in the T+1 Session should provide bid / offer quotes in at least 25 option series chosen from the following selection pool:
|
Contract Month
|
Option Series
|
Series For Selection
|
|
|
Call
|
Put
|
|
Spot month
|
Out-of-the-Money
|
15
|
15
|
|
In-the-Money
|
2
|
2
|
|
2nd Calendar Month
|
Out-of-the-Money
|
15
|
15
|
|
In-the-Money
|
2
|
2
|
|
1st Quarter Month
|
Out-of-the-Money
|
10
|
10
|
|
In-the-Money
|
2
|
2
|
|
2nd Quarter Month
|
Out-of-the-Money
|
10
|
10
|
|
In-the-Money
|
2
|
2
|
|
Total
|
116
|
Weekly Stock Index Options
|
MM for T Session
|
MM for T+1 Session
|
|
For MM that provides continuous quote (CQ):
|
|
Min. % of trading hours coverage
|
70% of T Session
|
70% of T+1 Session
|
|
Min. Quote series
(selected from the pool*)
|
30 series in total for spot week and next week contracts (or 15 series if only one contract is available.**)
|
30 series in total for spot week and next week contracts (or 15 series if only one contract is available.**)
|
|
Min. Quote Size
|
5 contracts
|
5 contracts
|
|
Max. bid/offer spread
|
Price
1-750 points
>750 points
|
Max. bid/offer spread
Max (30 points, 10% of bid)
75 points
|
Max. bid/offer spread
Max (40 points, 20% of bid)
150 points
|
|
For MM that responds to quote request (QR):
|
|
Min. % of QR responses
|
70% of QR issued in T Session
|
70% of QR issued in T+1 Session
|
|
Max. Time to respond to QR and Min. Display time
|
20 sec
|
20 sec
|
|
Min. Quote Size
|
5 contracts
|
5 contracts
|
|
Max. bid/offer spread
|
Price
1-750 points
>750 points
|
Max. bid/offer spread
Max (30 points, 10% of bid)
75 points
|
Max. bid/offer spread
Max (40 points, 20% of bid)
150 points
|
*CQMM can select options series from the following CQ series selection pool:
|
Contract Month
|
Moneyness
|
Call
|
Put
|
|
Spot Week
|
Nearest OTM
|
14
|
14
|