The Securities and Futures Commission (SFC) proposes changes to the position limit regime in Hong Kong

The Securities and Futures Commission (SFC) proposes changes to the position limit regime in Hong Kong

“A few days ago, the Securities and Futures Commission (SFC) in Hong Kong issued a consultation paper on proposed changes to the position limit regime for listed futures and options contracts. The main proposals therein are as follows:

  • to include additional futures and options contracts bound by position limits, as well as to revise the aggregate position limits and the spot month for certain contracts;
  • to include reportable positions for futures and options contracts traded during holidays (complemented by the launch HKEX Derivatives Holiday Trading program on 9 May 2022);
  • to establish that the statutory prescribed limits and reportable positions should be applied to each unit trust and sub-fund under an umbrella fund as if it were a stand-alone fund;
  • to include a wider range of contracts which may be authorised by the SFC for excess positions;
  • to introduce an authorisation mechanism for a clearing participant (CP) to hold excess positions when providing clearing services and prescribing position limits and reportable positions in relation to certain futures and options contracts launched by the HKEX;
  • to ensure that CPs have no “discretion” in relation to clearing clients’ positions.

Written comments on the proposals may be submitted until 27 June 2022. After the end of the consultation period, a consultation conclusions paper will be published.”