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Overseas Participation In HK Derivatives Market Rises

by Mary Swire, Tax-News.com, Hong Kong

23 November 2012


Overseas investors' participation in Hong Kong's futures and options market reached the highest level since 2005, according to Hong Kong Exchanges and Clearing Limited’s (HKEx) Derivatives Market Transaction Survey 2011/12.

The survey found that principal trading and investor trading by exchange participants continued to contribute equally to HKEx's derivatives market turnover from July 2011 to June 2012, and that the overseas investors' contribution marginally surpassed that of local investors for the first time.

In 2011/12, the total market turnover for the futures and options under study was 135m, up 6% from the 127m contracts traded in 2010/11. Stock options remained the dominant product by turnover, contributing 50% of the total market turnover (as measured by contract volume).

While principal trading (comprising market maker trading and proprietary trading) contributed 50% of total market turnover (compared with 51% in 2010/11), overseas investors provided 26% of the remaining market turnover (up from 23% in 2010/11) and local investors contributed 24% (down from 26% in 2010/11).

For Hang Seng Index futures, overseas institutional investors were the major contributors (44% of the product’s turnover), while principal trading and local retail investors were also significant (22% for each). With regard to H-shares Index futures, overseas institutional investors were also the major contributors, at 56%.

United Kingdom investors were the largest contributor to overseas investor trading (28% in 2011/12, up from 25% in 2010/11). They were followed by Continental European investors (24%, up from 16% in the previous year) and United States investors (16%, down from 23% in 2010/11). Almost all trading, over 95%, from those countries came from institutional investors.

The aggregate contribution from investors in Asia outside Hong Kong was 28% of overseas investor trading, mainly from Mainland China and Singapore (12% and 11% respectively).

A comprehensive report in our Intelligence Report series giving a country-by-country analysis of offshore investment funds, stock exchanges and trusts, with an analysis of the US QI regime, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report9.asp
TAGS: investment | business | capital markets | offshore | Hong Kong | alternative investment

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