SFC proposes to relax position limits for key exchange-traded derivatives

On February 27, 2025, the Securities and Futures Commission ("SFC") introduced a consultation that proposes to elevate position limits for exchange-traded derivatives tied to the three major stock indices in Hong Kong. This move aligns with the market's growth and aims to enhance hedging activities.

The proposed increase aims to facilitate market participants' hedging activities by raising the current position limits for futures and options contracts. Specifically, the Hang Seng Index's limit will increase by 50% to 15,000 position delta, the Hang Seng China Enterprises Index's limit by 108% to 25,000 position delta, and the Hang Seng TECH Index's limit by 43% to 30,000 position delta.

The primary objectives of these adjustments are to ensure that Hong Kong's derivatives markets can keep pace with the increasing market capitalizations and trading volumes of the major stock indices. This initiative is designed to maintain market integrity and liquidity without introducing new risks.

Ms Julia Leung, Chief Executive Officer of the SFC, underscored that the relaxation of position limits will enhance flexibility in position management and promote the liquidity and efficiency of both the derivatives market and the broader financial markets.

The SFC aims to fortify the competitiveness of Hong Kong's financial markets through this proposal, while adhering to a stringent regulatory framework to manage systemic risks effectively. Comments from the public are encouraged and can be submitted by March 28, 2025, through the SFC’s website (www.sfc.hk), email (This email address is being protected from spambots. You need JavaScript enabled to view it.), postal mail, or fax (2521 7917).