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Local Retail Investors Were The Major Contributors To HKEx Derivatives Market

Date 12/11/2001

A recent survey by Hong Kong Exchanges and Clearing Limited (HKEx) shows that local retail investors were the major contributors to the trading of HKEx derivative products. They contributed 36 per cent of total transactions in HKEx's major derivatives products, Hang Seng Index (HSI) Futures, HSI Options, Mini-HSI Futures, HIBOR (Hong Kong Interbank Offered Rate) futures and stock options, from July 2000 to June 2001. Principal trading contributed 33 per cent, overseas institutional investors 16 per cent, local institutional investors 14 per cent and overseas retail investors 1 per cent.

The Derivatives Market Transaction Survey reveals that the trading composition for different products was very different. Local retail investors continued to be the major players in HSI Futures and Mini-HSI Futures, contributing 56 per cent and 88 per cent of the respective totals. On the other hand, HIBOR futures attracted only institutional investors. Overall, overseas agency trading, mainly from institutional investors, contributed 17 per cent of total derivatives transaction volume. But the overseas contribution was much higher for HSI and HIBOR products (23 per cent) than for stock options (5 per cent). In contrast with the dominance of agency trading for HSI and HIBOR products (over 90 per cent), principal trading contributed 83 per cent of stock options transactions. For overseas agency trading by origin, the UK contributed the largest portion at 39 per cent, followed by the US 27 per cent ¾ similar to the Cash Market.

The annual Transaction Survey has been conducted since 1994. The 2001 survey covered the stock options market for the first time. Questionnaires on transactions covering the period from July 2000 to June 2001 were sent to 155 trading participants in HKEx's derivatives market. A response rate of 92 per cent was achieved.

The full report on the HKEx Derivatives Market Transaction Survey 2000/01 is available on the HKEx website (http://www.hkex.com.hk/research/reideas/DMTS01.htm).