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Investors

Exchange Traded Products (ETPs) are an increasingly popular investment tool that has transformed the way institutional and retail investors build a diversified portfolio. Investors find ETPs to be a simple investment tool to gain:

diverse 

Access

Diversified access to a wide range of asset classes, sectors, geographies & innovative strategies 
funded 

Cost-efficiency 

Low transaction cost 
Convenience 

Convenience 

Trade anytime HKEX is open  

Access HKEX ETP list here.

HKEX Listed Exchange Traded Products (ETPs)
HEALTHY AND ROBUST SECONDARY MARKET
Exchange Traded Funds

An Exchange Traded Fund (ETF) is an open-end fund that can be bought and sold on a stock exchange. It can be actively managed, seeking to outperform a market index; or passively managed, seeking to match the performance of a market index.

Leverage and Inversed ETF
Leveraged and Inverse Products

A Leveraged and Inverse Product (L&I Product) is a leveraged ETF that seeks to achieve short-term investment results that correspond to the daily leveraged (2x) or daily inverse (up to -2x) of the underlying benchmark.  Download L&I Product Leaflet

Leveraged and Inverse Products

Updated 04 Sep 2019


ETP_Spread_Effective_Web_1440x500

New Spread Table for ETPs

To foster liquidity growth in Hong Kong’s ETP market and to create greater trading flexibility for ETP investors, HKEX has introduced a new spread table with reduced tick size for Hong Kong-listed ETPs.  (Download primer)

New Spread Table for ETPs

Currency Unit New Tick Interval Old Tick Interval
From 0.01 to 0.25 0.001 0.001
Over 0.25 to 0.50 0.005
Over 0.50 to 1.00 0.010
Over 1.00 to 5.00 0.002
Over 5.00 to 10.00 0.005
Over 10.00 to 20.00 0.010 0.020
Over 20.00 to 100.00 0.020 0.050
Over 100.00 to 200.00 0.050 0.100
Over 200.00 to 500.00 0.100 0.200
Over 500.00 to 1,000.00 0.200 0.500
Over 1,000.00 to 2,000.00 0.500 1.000
Over 2,000.00 to 5,000.00 1.000
2.000
Over 5,000.00  to 9,999.00 5.000

What is a spread table?

A spread table maps out the minimum price movements (i.e. tick intervals) for securities trading at different price ranges. For example, in the new spread table for ETPs, for a product trading at $15, i.e. in the price range of $10 to $20, the new tick interval will be $0.010 – a 50% reduction from the old tick interval of $0.020.

Benefits of tick size reduction

  Greater flexibility  The narrower price intervals give investors greater flexibility to react to small market changes
  Increase price efficiency The new spread table allows market prices to adjust to new information more promptly, so that prices can better reflect the prevailing market conditions
  Potential for lower costs Reduced tick sizes lay the basis for the further narrowing of bid-ask spreads, which can potentially lead to lower transaction costs

 

Case study*

The reduction in tick size for ETPs will effectively reduce their minimum achievable spreads, which is favourable to the further tightening of trading spreads of liquid, tick-constrained ETPs.

The following case study selects five liquid ETPs in Hong Kong that are trading at minimum spread for over 90% of the time. The analysis shows that the spread of ETPs can potentially be reduced by 50-60%.

Representative ETF in Hong Kong Market
Closing Price^ Estimated % of Time Trading at Minimum Spread Average
90-day Spreads
(bps)
Existing Minimum Achievable Spread (bps) New Minimum Achievable Spread
(bps)  
Reduction
ETF A $28.5 91% 19.1 17.6 7.0 -60%
ETF B $113.4 99% 10.2 8.8 4.4 -50%
ETF C $15.2 95% 13.8 13.1 6.6 -50%
ETF D $15.3 95% 13.7 13.1 6.5 -50%
ETF E $46.4 91% 11.7 10.8 4.3 -60%

* The case study is for illustration purpose only. The actual spread may differ from the minimum achievable spread
^ Source: Bloomberg, data as of 31 December 2019

Updated 01 Jun 2020


Why invest in Hong Kong listed ETPs?

DIVERSE AND GLOBAL INVESTOR BASE
Diversified Exposure

HKEX offers the most diversified product line-up in Asia with over 130 ETPs providing access to the global equity, commodity and fixed income markets. This enables investors to select their preferred ETPs based on investment objective and risk appetite.

Liquidity
Deep Source of Liquidity

With over 30 market makers a deep source of liquidity is always available for investors to buy and sell ETPs with relative ease.

Tax
Tax Efficiency

Often overlooked, Hong Kong’s low and simple tax regime allows Asian investors to enjoy relatively higher after-tax returns resulting in higher portfolio return on investment (ROI).

Asia
Asia’s Local Market

Increasingly investors are investing in Asian markets through ETPs. For the optimal liquidity and price discovery, its best to trade those products during Asian market hours.

What are some common uses of ETPs?

Due to ETPs versatility, investors have found both tactical (shorter-term) and strategic (longer-term) uses for ETPs. Here are some of the more commonly used strategies.

Tactical Uses Strategic Uses
Tactical Adjustments

Over or under-weight exposures on the basis of short-term views

Asset Allocation

Gain long-term asset allocation among primary asset classes such as equities, fixed income and commodities

Cash Equitisation

Use ETPs to invest surplus cash to maximise returns and/or minimise cash drag
Sub Asset Allocation

Strategic tilts within asset classes such as small capitalisation stocks
Interim Beta

Access market exposure while evaluating managers or refining strategic investment view
Liquidity Management

Ability to refine portfolio positions without impacting longer-term holdings or gain quick access to liquidity for unexpected and immediate needs
Leverage / Inverse Investing

Capitalise on short-term market movements with leveraged or inverse (short) investing  
Portfolio Completion

Fill gaps to desired allocation with exposure to specific areas of the market

 

Updated 03 Sep 2019

Trading Information

Trading Arrangement

ETPs are traded on the securities market of HKEX.

See more:

Download Exchange Traded Product Trading Arrangement

Transaction cost

Transaction of ETPs is subject to trading fee, trading tariff, transaction levy and settlement fee. Stamp duty is waived for all ETPs.

See more:

Trading cost 

Clearing and settlement cost

Trading Currency

ETPs can be traded in HKD, RMB (CNH) or USD.  

Short Name Convention and Stock Code Allocation

Investors can distinguish between different types and trading counters of an ETP by their stock codes and stock short names.

See more:

Download Naming Convention of Stock Short Name and Stock Code

Distribution of L&I Products by Intermediaries

Intermediaries are advised to note and understand L&I Product features and corresponding obligations when providing services to clients.

See more:

Download Distribution of L&I Products by Intermediaries 

Participant Circular on Launch of Leveraged and Inverse Products

SFC’s Circular on Providing Services to Clients with respect to Leveraged and Inverse Products

Updated 30 Jul 2020