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HKEX To Introduce Its First RMB Currency Options On 20 March

Date 16/02/2017

Hong Kong Exchanges and Clearing Limited (HKEX) will introduce its planned Renminbi (RMB) Currency Options on Monday, 20 March 2017.

The US dollar-Offshore RMB (USD/CNH) Options will be the first currency options traded at HKEX.

The eight contract months on the launch day will comprise April, May, June, July, September and December 2017, and March and June 2018.

HKEX has invited Futures Exchange Participants (FEPs) to apply to serve as liquidity providers for USD/CNH Options, and it is planning a joint promotion programme with FEPs, which will include sponsorship of marketing activities, support on promotional materials and awards for top programme participants.  To enhance transparency and encourage market development, a list of FEPs offering trading of USD/CNH Options will be posted on the HKEX website.  For details, please see today's circular.

The new product will complement HKEX's USD/CNH Futures, which have been the world leaders in liquidity and distribution among exchanges over the last few years, and other RMB Currency Futures.  HKEX accounts for about two-thirds of the open interest for all the world's exchange-traded USD/CNH futures.

The total trading volume of HKEX's USD/CNH Futures in 2016 rose 105 per cent from the previous year to an all-time high of 538,594 contracts (ie, US$54 billion, or RMB370 billion#, in notional amount).  Last month, trading was up 57 per cent from January 2016 and there was record high open interest (46,711 contracts, ie, US$4.7 billion, or RMB32.0 billion#, in notional amount, on 4 January) and single day trading (20,338 contracts, ie, US$2.0 billion, or RMB14.0 billion#, on 5 January).  Since 14 February 2017, a new contract month and 16 new calendar spread combos of USD/CNH Futures have been available for trading. 

Additional information is available in the 4 January 2017 news release on the HKEX website.

Key Contract Specifications for USD/CNH Options to be Introduced 20 March 2017

 

Contract Size

US$100,000

Official Settlement Price

USD/CNY (HK) Spot Rate published by the Hong Kong Treasury Markets Association (TMA)* at or around 11:30 am on the Expiry Day

Settlement on Exercise

 

Physical delivery on exercise

 

 

Holder

Writer

Call Options

Payment of the Final Settlement Value^ in RMB

Delivery of US dollars

Put Options

Delivery of US dollars

Payment of the Final Settlement Value in RMB

 

 

Exercise Style

European

Contract Months

Spot month, the next three calendar months and the next four calendar quarter months

Final Settlement Day

Generally Third Wednesday of the Contract Month

Expiry Day

Two Hong Kong Business Days prior to the Final Settlement Day

Trading Hours

(Hong Kong Time)

9:00 am to 4:30 pm (Trading hours on the Expiry Day are from 9:00 am to 11:00 am) on Hong Kong business days

Exchange Fee

RMB8 per contract (Waived for the first six months)

Exercise Fee

RMB8 per contract

Commission Levy

Nil

Position Limit

For USD/CNH Futures, CNH/USD Futures and USD/CNH Options combined, a position delta of 8,000 long or short in all Contract Months combined provided that:

  • Position delta for Spot Month USD/CNH Futures and Options combined during the five Hong Kong business days up to and including the Expiry Day shall not exceed 2,000 long or short; and
  • The position for CNH/USD Futures shall not at any time exceed 16,000 net long or short contracts in all contract months combined

Large Open Positions

500 open contracts in any one series

Holiday Schedule

Hong Kong holiday schedule

 

Details of the contract specifications are in a circular on the HKEX website.

# Based on exchange rate as of 14 February 2017.
* Please refer to the HKEX website for the TMA's disclaimer and copyright notice regarding information provided on its website.
^ Final Settlement Value is the Strike Price multiplied by the Contract Size applies to both Call and Put Options.