Trading Fee Waivers for Market Maker Transactions in ETPs
Starting from 31 May 2021, new trading fee waiver rates will be applied to different ETF categories for market maker transactions, applicable to both Securities Market Makers and Designated Specialists, as set out below:
- Trading fee waiver in relation to market maker transactions on ETFs that invest into domestic equity securities,with trailing 12-month average daily turnover (ADT) not less than HK$300 million will be 25%.
- Trading fee waiver in relation to market maker transactions on ETFs that invest into non-domestic equity securities and L&I Products, with trailing 12-month ADT not less than HK$300 million will be 75%.
- Trading fee waiver in relation to market maker transactions on other ETPs will be 100%.
Please refer to Exchange Circular Ref No. ETP/001/21. The list of ETPs and the applicable rate of trading fee exemption are also available on HKEX website and will be reviewed on a quarterly basis and updated accordingly.
Learn more about Securities Market Maker and Designated Specialist
Securities Market Makers (SMMs) and Designated Specialists (DSs), collectively called market makers provide liquidity to Hong Kong ETP market.
Here are the details of SMM and DS:
|
Securities Market Maker (SMM) |
Designated Specialist (DS) |
| Product scope |
All ETP counters (Exchange Traded Funds and Leveraged and Inverse Products) |
| Eligibility |
Exchange Participants (EP) of SEHK that demonstrate that it is suitably qualified in terms of financial standing, risk management, trading record, computer equipment and internal security procedures as stipulated in Explanatory Note EN10*
If SMM holds market making positions in accounts of an affiliate, the affiliate has to fulfil one of the below criteria:
-
A regulated entity is one regulated by an exchange, clearing house, independent authority or commission which is acceptable to HKEX;
- The affiliate must have and must maintain a current credit rating of A- or above (Standard & Poor’s) or A3 or above (Moody's);
- The paid-up capital of the entity must be at least equal to the equivalent of HK$50,000,000 and its shareholders' funds must be at least the equivalent of HK$100,000,000 at all times.
|
Clients of EPs that satisfy one of the below criteria:
- licensed by or registered with the SFC for Type 1 or Type 2 regulated activities under the Securities and Futures Ordinance, or licensed, registered for similar activity by an overseas authority having a memorandum of understanding with the SFC for the sharing of market surveillance information
- licensed bank regulated by an authority acceptable to SEHK
- maintained a current long-term credit rating of A- or above (Standard & Poor’s) or A3 or above (Moody's)
- maintained a paid-up capital of at least HK$50,000,000 and shareholders' funds of at least HK$100,000,000
Point to note:
- An EP can register one or more DS for an ETP counter
- A DS can be registered by more than one EP only for different ETP counters
- An EP may apply to make market on the same ETP counter as its registered DS
|
| How to apply/register? |
EP should submit application form (Form 10), internal report and documentary evidence showing its affiliate satisfying relevant requirements (if applicable)
Download Application Form 10
Download Explanatory Note 10
|
EP should submit application form (Form 10A) and internal report as stipulated in Explanatory Note EN10A to register for its DS
Download Application Form 10A
Download Explanatory Note 10A
|
| Market making device |
EP can apply for a Market Making Orion Central Gateway - Securities Market (MMOCG-C) session at a discounted rate for market making of ETPs for itself and for each of its DS.
Download Application Form
Download Explanatory Note
|
| Market making arrangement |
Market makers receive incentives and are subject to market making obligations.
Download Market Making Arrangement
Please note obligations of DS are monitored based on unique broker number.
|
| Market making obligations, market making trading fee exemption rate and spread table |
Market Making Obligations, Market Making Trading Fee Exemption Rate, and the Spread Table of each ETP can be found below.
Download Market Making Obligation, Market Making Trading Fee Exemption Rate, and Spread Table (.xlsx format)
Download Market Making Obligation, Market Making Trading Fee Exemption Rate, and Spread Table (.csv format)
|
| Stamp duty waiver for market makers |
SMMs and DSs can apply for waiving the stamp duty on stock transfers in the course of creating and redeeming ETP units listed in Hong Kong.
For details of the operations, please refer to Explanatory Note 10 / 10A. Relevant documents can be found here.
|
| Buy-in Exemption for market makers |
SMMs and DSs can apply through their Clearing Participants no later than 20:00 HKT on standard settlement date (T+2) for a one-day buy-in exemption on short positions that resulted from market making activities.
For details, please refer to CCASS Operational Procedures Section 10.8.3 and 10.8.4. The application form can be found here.
|
For more information about becoming a market maker for an ETP listed on HKEX and our market making programme, please refer to our infosheet or email ETFs@hkex.com.hk or LIProducts@hkex.com.hk.