Hang Seng Index (HSI), the benchmark of the Hong Kong stock market, is one of the best known indices in Asia and widely used by fund managers as their performance benchmark.
The HSI is a market capitalisation-weighted index (shares outstanding multiplied by stock price) of the constituent stocks. The influence of each stock on the index's performance is directly proportional to its relative market value. Constituent stocks with higher market capitalisation will have greater impact on the index's performance than those with lower market capitalisation. The constituent stocks are grouped under Commerce and Industry, Finance, Properties and Utilities sub-indices.
The latest list of constituent stocks is available on the website of Hang Seng Indexes Company Limited at http://www.hsi.com.hk
Hang Seng Index Futures
To meet the growing interests in the Hong Kong stock market and rising demand for related hedging tools, the Hong Kong Futures Exchange (HKFE) first introduced HSI futures contracts in May 1986.
Hang Seng Index Options
Following the success of HSI futures, HSI options contracts were introduced in March 1993. 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
The HSI futures and options provide investors with a set of effective instruments to manage portfolio risk and to capture index arbitrage opportunities. The popularity of Hang Seng Index futures and options has developed gradually with increasing domestic and international investors' participation.
Proven Markets
HSI futures and options allow experienced and novice investors alike to participate in the performance of constituent stocks in the index. As both local and international investors regard Hang Seng Index as a time-tested benchmark for the Hong Kong equity market and yardstick of portfolio performance, these contracts are consistently used by different investors for trading and risk management purposes.
Cost Effective
HSI futures and options facilitate hedging activities in a cost-effective way as these contracts are traded on a margin basis. The margin to carry an open position is only a fraction of the contracted value.
Low Transaction Costs
As the total value of high-capitalisation stocks represented in each HSI futures and options contract is substantial and only one commission is charged to establish or liquidate a contract, transaction costs are low when compared to purchasing or selling the constituent stocks.
Clearing House Guarantee
HSI futures and options are registered, cleared and guaranteed by the HKFE Clearing Corporation (HKCC), a wholly-owned subsidiary of the HKFE. The HKCC acts as the counter-party to all open contracts, which effectively eliminates counter-party risks between its HKCC Participants. The HKCC guarantee does not cover an HKCC Participant's obligations to its clients. Investors should exercise due care and diligence when deciding through whom they will conduct business.
| Item | Contract Terms | Flexible Options | ||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Underlying Index | Hang Seng Index | |||||||||||||||||||||||||||||
| HKATS Code | HSI | XHS | ||||||||||||||||||||||||||||
| 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 five 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 |
|
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.
