Hong Kong’s stock exchange is looking at introducing a suite of new exchange-traded products (ETP) after rolling out an initiative to tighten trading spreads and enhancing liquidity in the US$38 billion market.
The move comes as the HKEX initiated new rules that tightened so-called price ticks and introduced continuous market making obligations on ETPs
Hong Kong Exchanges & Clearing Ltd. is considering four new types, including leveraged and inverse products that track Chinese mainland A share indexes, fixed income exchange traded funds (ETF), sectoral and thematic ETFs with underlying Chinese assets and those with an environmental, social and governance investing strategy, Head of Exchange Traded Products Brian Roberts said in interview.
The products tracking mainland indexes would be the “next source of innovation and diversification,” he said. The recent increase in investor interests in fixed income ETFs seen in the US will also “come to Asia,” he said.
As part of its three-year plan, the exchange is seeking to broaden its palette of trading, moving away from its predominant equity focus. The exchange on Monday initiated new rules that tightened so-called price ticks and introduced continuous market making obligations on ETPs. It’s also getting help from the government, which is going to waive stamp duty for ETF market makers creating and redeeming units starting Aug 1.
At the end of April, Hong Kong housed 131 ETPs with a combined market capitalization of HK$295 billion (US$38 billion). The first ETF was launched in the city in 1999.
The bourse scored a big win over its main rival in Singapore last week, signing a licensing deal with MSCI Inc. for 37 futures and options contracts.
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