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HKEx to Introduce Flexible Index Options on 8 February
January 19, 2010--Hong Kong Exchanges and Clearing Limited (HKEx) plans to introduce Flexible Index Options (FIOs) on 8 February this year to expand the coverage of over-the-counter (OTC) contracts by its derivatives market's block trade facility (BTF).
FIOs comprise Hang Seng Index (HSI) and H-shares Index (HHI) options contracts with customised strike prices and expiry months which must be executed through the BTF. Each series will be created by HKEx upon the request of an Exchange Participant. The flexibility is offered under the following framework:
Strike prices* can be any whole index points within +/-30 per cent 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 in the contract month requested and all other existing contract months with longer expiry terms, whichever range is the largest; and
Expiry day is the second to last trading day of any calendar month and the expiry month* can be any calendar month, provided it is not further out than the most distant existing expiry month available for trading.
Seven New Indices to be Launched
January 19, 2010--The Shanghai Stock Exchange (SSE) and China Securities Index Co., Ltd. (CSI) have recently announced that a series of new indices would be officially launched on February 9, 2010, namely SSE Industry Top Index (SSE Industry Top), CSI Industry Top Index (CSI Industry Top), CSI Local State-owned Enterprises Composite Index (CSI L SOEs), CSI Local State-owned Enterprises 100 Index (CSI L SOEs 100), CSI State-owned Enterprises Composite Index (CSI SOEs), CSI State-owned Enterprises 200 Index (CSI SOEs 200) and CSI Galaxy 99 Index (Galaxy 99).
It is learnt that both SSE Industry Top and CSI Industry Top constituents are selected from stocks of companies with large market capitalization and outstanding business income and profit performances in the industries. These firms, typical of blue chips, win themselves a name of "top enterprise" for their large scale, big market share and great influence on the development trend and ebb and flow of the industry as a whole. According to the latest statistics, the market capitalizations of SSE Industry Top and CSI Industry Top are RMB8.95 trillion and RMB10.22 trillion, or 49.02% of that of A shares on the SSE and 42.45% of that of A shares on both the SSE and the Shenzhen Stock Exchange (SZSE), respectively. Some fund companies have been reported to commit themselves to the development of ETF products of SSE Industry Top.
Asset Plus launches fund for investment in HK
January 18, 2010--Asset Plus Fund Management has launched the initial public offering of Asset Plus HSI Fund, to draw investment to Hang Seng Index exchange-traded funds.
The investible funds are listed in the Hong Kong Stock Exchange, and guarantees transparency. The investment is in the form of Hong Kong dollar, which moves in relation to US dollar.
Citic seeks investors for China Asset Management
January 18, 2010--Citic Securities, China’s biggest listed securities brokerage, is actively searching for investors, including foreign financial institutions, to buy part of its stake in China Asset Management Co, the country’s largest fund manager by assets, according to people familiar with the matter.
Citic has owned 100 per cent of China AMC since 2007, despite regulations that forbid single shareholders in fund management companies from owning more than 49 per cent.
CNMEX to introduce cross-asset class Exchange Traded Fund market maker rebate program
Jnauary 18, 2010--“This incentive program is designed to remove hedging friction for options Market Makers and to attract further trading activities and listing opportunities on China Mercantile Exchange, said Liu Wong Huiliang, Deputy Press Officer for China Mercantile Exchange.
Under the rebate program, each options contract traded by the designated Market Maker on China Mercantile Exchange will generate a per-share credit to offset trading activities.
“The development of this new cross-asset class subsidization of options market making activities further supports CNMEX’s efforts to encourage growth in the derivatives sector, and to develop an integrated cash and derivatives trading business,” said Huiliang.
India suspends SocGen from trading
January 15, 2010--Société Générale was on Friday threatened with expulsion from the Indian equities market for allegedly violating “know your client” rules that compel companies to provide complete information on overseas customers.
The Securities and Exchange Board of India, the market regulator, alleged SocGen had provided incomplete information on overseas clients that had bought shares of Reliance Communications, controlled by Indian billionaire Anil Ambani, through offshore derivatives known as participatory notes.
DB Index Research -- Weekly ETF Reports - Asia-Pacific
January 14, 2010--Highlights
Market Overview
There are 199 equity based ETFs in the Asia Pacific region with 258 listings across 12 countries and 15 exchanges. Japan has the largest market share by AUM accounting for 41.02% of the whole market, whilst China has the largest market share by turnover with 52.42%.
There was one new listing in the last week. Guotai Asset Management listed one new Equity ETF in Shenzhen Stock Exchange
Turnover
Monthly average daily turnover declined 24.9% in the last week. Turnover for the previous week was USD 889m. The largest ETF by turnover was the China 50 ETF issued by China Asset Management with USD 288m accounting for 32.4% of total turnover.
Assets Under Management
AUM rose 4% in the previous week. AUM as of Jan 11th were USD 62.8bn. The largest ETF by AUM is the TOPIX ETF managed by Nomura Asset Management with AUM of USD 6.2bn.
To request a copy of the report
'Crash-tested' China fund unveiled
January 13, 2010--Citigroup will today launch China StormRiders, a mutual fund that will invest exclusively in Greater China equities that have proved resilient to market crashes.
The fund, actively managed to respond to changing market conditions, will provide foreign investors with an alternative to the passive index-trackers that dominate the nascent China fund market.
Only companies that have performed well relative to their peers in historical market crashes are eligible for selection in the fund portfolio.
Reply to PQ on Regulatory Framework for Dark Pools
January 12, 2010--Question No. 55
Notice Paper No. 308 of 2009
For Written Answer
Name and Constituency of Member of Parliament
Mdm Ho Geok Choo, MP for West Coast GRC
Question:
Mdm Ho Geok Choo: To ask the Senior Minister with the emergence of dark pools which allow trading of stocks to occur away from public eyes and off central exchanges (a) how will the Ministry deal with the regulatory issues that these dark pools are likely to throw up; and (b) how will the Ministry address issues such as insider trading if investors are allowed to trade anonymously.
Answer:
1. Dark pools, otherwise known as crossing networks, are an alternative trading venue where institutional investors can transact large blocks of shares that are listed and traded on stock exchanges. Concerns that have been raised about crossing networks include possible market fragmentation and a lack of transparency.
2. The Monetary Authority of Singapore (MAS) recognises these concerns and has brought crossing networks under its regulatory regime for recognised market operators1 since September 2007. These market operators are permitted to offer trading access only to institutional investors, and have to comply with the relevant statutory obligations. These include ensuring that the market is fair and orderly; managing any risks associated with its business and operations prudently; and not acting contrary to the interests of the public.
Market Fragmentation
3. Currently, orders above S$150,000 or 50,000 shares can be executed off the Singapore Exchange (SGX) as SGX members can negotiate such orders directly with each other. These off-exchange trades are subject to relevant SGX trading rules which require a trade to be reported to the Exchange within 10 minutes of execution. SGX’s rules seek to balance the ability of institutional investors to execute large transactions, minimising market impact costs2, with the overall requirements of market transparency and integrity. MAS has required crossing networks to match only large orders that comply with the SGX off-exchange thresholds. As an additional measure to prevent liquidity in the exchange from being fragmented by the crossing network, MAS has set limits on the volume any crossing network can trade in any single SGX-listed share.
Deutsche Bank lists six more ETFs on SGX
January 11, 2010--The new exchange-traded funds include the first fund in Asia to track the Brazilian stock market. The bank expects sizable growth in inflows from pension and sovereign funds.
Deutsche Bank has launched six more exchange-traded funds (ETFs) on the Singapore Exchange (SGX), including Asia's first ETF tracking the performance of the Brazilian equity market.
The six products are: the Emerging Markets TRN Index ETF, MSCI Brazil TRN Index ETF, MSCI Russia Capped Index ETF, MSCI World TRN Index ETF, MSCI Pacific ex Japan TRN Index ETF and MSCI EM Asia TRN Index.
