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launch a derivatives circuit breaker was postponed
until January this year. The mechanism triggers cooling-off periods if there are attempts to trade futures
contracts at a price more than 5% away from its last
traded price within five minutes. In April, HKEX
launched a risk management system for derivatives
to prevent the unintended build up of excessive
positions by setting limits to manage exposure to risk
It was a big year for RMB both onshore and offshore
and HKEX took advantage of this in 2016 to build out
its fixed income and currencies services. In June, the
exchange teamed up with Thomson Reuters to release
a series of RMB indices to measure its performance
against the USD, GBP and EUR. They allow users
to view intra-day RMB movements by trade volume
between issuers and Mainland China with data from
the Hong Kong Census and Statistics Department.
The London Stock Exchange (LSE) listed its first RMB
ETF around the same, which tracks the FTSE China
Onshore Sovereign and Policy Bank Bond Index.
The LSE said 2016 marked not only the first Chinese
sovereign RMB bond issued outside of China, but also
the first issuance of RMB 5 billion short term central
banks notes in Europe and the first issuance of $1
billion dual currency green bonds in a European city,
including a 600 million RMB-denominated tranche by
the Agricultural Bank of China.
The exchange made several key senior leadership
appointments in 2016. Kenneth Kok was appointed as
head of cash trading following David Lo’s retirement
in May. Kok has worked in financial services since
1999 and was previously an executive director for
Goldman Sachs in Hong Kong. In June, HKEX’s head
of markets, Lee Kwok Keung Rogers, was promoted to
chief executive officer of the Stock Exchange Market
of Hong Kong and the Hong Kong Futures Exchange.
He replaced Romnesh Lamba. Rogers was promoted to
head of cash markets in January 2016 and was responsible for the cash and derivatives trading, market data
and market surveillance functions.
Looking to the future, HKEX has established several
targets for improving the market’s performance. In
the fourth quarter this year, the exchange is hoping
to replace its current securities trading system with
the Orion Trading Platform. The new system is set to
build a bigger market and transform market access,
connectivity, speed and efficiency for users. The Orion
system will also be rolled out to derivatives trading
and the planning process for the upgrade of existing
derivatives trading and clearing platforms has already
been completed. Following the launch of the Shenzhen
Stock Connect, HKEX has set its sights on expanding asset classes across the model, including primary
listings, commodities and bonds.
The overall decline in revenues in 2016 means the
exchange operator has some ground to make up this
year, but as it moves forward with the initiatives outlined in the strategic plan for the next couple of years,
2017 has promise to be a successful year for HKEX.