Hong Kong exchange debuts MSCI futures contracts in bid for international reach

July 6, 2020.

Hong Kong Exchanges & Clearing rolled out new futures offerings under a licensing agreement with on Monday, marking the latest move in the exchange’s effort to become Asia’s leading financing market.

The launch, which introduced the first 10 of the 37 MSCI index futures and options contracts to be listed this year, will be followed by a second tranche of seven futures contracts to be added on July 20, the exchange said

The first 10 contracts are denominated in U.S. dollars and track underlying equities in markets such as Australia, mainland China, India, Indonesia, Japan, Malaysia, Taiwan and Thailand, according to HKEX. The exchange introduced incentives for liquidity providers, proprietary traders and block trade participants to facilitate the liquidity development of the contracts.

This range of international equities is a priority for HKEX, which emphasized the “need to attract and service an expanding global customer base by adding Asia Pacific products across asset classes to our existing strong China product suite” in its strategic plan for 2019-21.

“Global connectivity is a central premise of our strategy and our business and these derivatives contracts will greatly expand the coverage of underlying assets beyond Hong Kong and mainland China, to the rest of Asia and beyond. This will bring enhanced liquidity to our markets and greatly complement our existing product suite,” HKEX Head of Markets Wilfred Yiu said.

HKEX’s most recent MSCI licensing agreement, which was first disclosed on May 26, follows the firms’ prior launch of MSCI Asia Ex-Japan Index futures and commitment to introduce MSCI China A Index futures on the exchange.

HKEX’s broadening coverage of international underlying assets will be critical if Asia’s third-largest capital market is to extend its global reach. HKEX CEO Charles Li Xiaojia underlined the importance of global connections to the exchange’s position at the interface between mainland China and international financial markets.

“Hong Kong, and HKEX in particular, will continue to play a critical role of connector, translator, and bridge between China and the world. Our role has never been more relevant or more important,” Li said in a June blog post.