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H-Share Index Options

There has been growing investors' interest in China-related securities resulting from the rapid expansion of Mainland economy. The Hang Seng China Enterprises Index (HSCEI) is a market capitalisation-weighted stock index which is compiled and calculated by Hang Seng Indexes Company Limited . The HSCEI tracks the performance of major H-shares. H-shares are Renminbi-denominated shares issued by People'S Republic of China (PRC) issuers under PRC law and listed on the Stock Exchange of Hong Kong, the par values of which are denominated in Renminbi, and which are subscribed for and traded in Hong Kong dollars.

The latest list of constituent stocks is available on the website of Hang Seng Indexes Company Limited at http://www.hsi.com.hk/HSI-Net/HSI-Net



H-shares Index Futures

The H-shares Index futures were introduced in 8 December 2003 based on the underlying HSCEI.



H-shares Index Options

Following the immediate success of the H-shares Index futures, the H-shares Index options were introduced in 14 June 2004. On 8 February 2010, Flexible Index Options with flexibility in setting strike prices and expiry months were introduced to facilitate the booking of customized over-the-counter option contracts.



Advantages of Trading H-shares Index Futures and Options

Fast Execution
A cost-effective way to track and establish broad market exposure linked to the performance of H-share companies.

Efficient Use of Capital
H-shares Index Futures and Options are traded on a margin basis. The capital outlay is much less than buying a H-share companies portfolio.

Low Transaction Costs
The transaction costs for trading H-shares Index Futures and Options are lower than trading a basket of constituents in HSCEI.

Clearing House Guarantee
Futures and Options contracts are registered, cleared and guaranteed by HKEx's Clearing House, eliminating counter-party risk. (The Clearing House guarantee does not cover a Clearing Participant's obligations to its clients. Investors should exercise due care and diligence when deciding through whom they will conduct business.)

Above information is obtained from Hong Kong Exchanges and Clearing Limited. (Last updated on 19 Nov 2010). Please go to website of Hong Kong Exchanges and Clearing Limited for latest information.

Item Contract Terms Flexible Options
Underlying Index Hang Seng China Enterprises Index
HKATS Code HHI XHH
Contract Multiplier HK$50 per index point
Minimum Fluctuation One index point
Contract Months Short-dated Options:- Spot, next two calendar months & next three calendar quarter months

Long-dated Options:- the next three months of June & December
Any calendar month not further out than the longest term of expiry months that are available for trading
Exercise Style European Style
Option Premium Quoted in whole index points
Strike Prices
Short-dated Options:-  
Index points Intervals
Below 2,000 50
At or above 2,000 but below 8,000 100
At or above 8,000 200
   
Long-dated Options:-  
Index points Intervals
Below 4,000 100
At or above 4,000 but below 8,000 200
At or above 8,000 but below 12,000 400
At or above 12,000 but below 15,000 600
At or above 15,000 but below 19,000 800
At or above 19,000 1,000
Within +/-30% from the opening price of the spot month futures contract on the day of request, or the range of the prevailing highest and lowest strike prices available amongst the contract month requested to be created, and all other existing contract months with longer expiry terms on the day of request, whichever range is the largest
Trading Hours 9:15am - 12:00 noon & 1:00pm - 4:15pm
(Expiring contract month closes at 4:00 pm on the Expiry Day) For Flexible Index Options, no request of series creation is acceptable within the last 30 minutes before market close
Expiry Day The Business Day immediately preceding the last Business Day of the Contract Month
Official Settlement Price The average of quotations taken at (i) five (5) minute intervals from five (5) minutes after the start of, and up to five (5) minutes before the end of, the Continuous Trading Session of SEHK; and (ii) the close of trading on SEHK on the Last Trading Day

Information can be obtained from Hong Kong Exchanges and Clearing Limited. Please go to website of Hong Kong Exchanges and Clearing Limited for latest information.