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The Hong Kong Exchanges and Clearing Limited (HKEX) launched the After-hours trading session from 5:15 p.m. to 3:00 a.m. to extend the trading of derivative products. Apart from the Day session, i.e. the morning and afternoon sessions, investors can trade specified derivative products including equity index futures and options, currency futures and commodities futures in the After-hours trading session, which will be cleared and settled on the following trading day (Please click here for products available in the After-hours trading session).

Investors can participate in after-hours trading through an intermediary who offers this service. You should check with your intermediary the arrangements for trading, settlement and the provision of contract notes and statements of account. You should also find out details about the margin requirements by the intermediary and make sure that margins can be deposited (e.g., by bank fund transfer), where applicable, to your intermediary during the After-hours trading session.

 

In terms of risk management, same as trading futures and options in the regular sessions, you should closely monitor your margin level and review whether you are able to maintain your positions during the After-hours trading session. You should:

  • Closely monitor the level of client margin imposed by HKEX and intermediaries
    When the market is volatile, HKEX and/or your intermediary may increase the margin requirement. You should keep track of the related arrangements made by HKEX and your intermediary.
  • Clarify the client margin requirements and if any trading limit has been set
    Some intermediaries may set a higher margin level for clients or impose trading limits to clients according to their financial strength. You should clarify with your intermediary the margin you should maintain, the trading limit if any and the detailed arrangements for you to pay and for intermediaries to call margin.
  • Ensure that funds can be instantly transferred during the After-hours trading session
    Some intermediaries might require their clients to deposit additional margin funds instantly (e.g., via online banking transfer facilities, ATM or PPS) to safeguard clients' positions, if considered necessary, during the After-hours trading session.

If investors maintain open positions overnight, they may be affected by after-hours trading. It is possible that intermediaries may contact their clients to top up margin taking into account market conditions. Therefore you should ensure that sufficient margins are in place.

To prevent excessive price movements during the After-hours trading session, HKEX puts in place some risk management measures, including a 5% price limit up/down mechanism for futures trading and trading halt mechanism for options trading. Please click here to review these two risk management measures.

Whether you are trading derivative products during the regular or the After-hours trading session, you should:

  • Fully understand the margin requirements and the arrangements in relation to forced closure of positions because intermediaries may close your position without prior notice if margin level maintained in your account is insufficient.
  • Watch out for price movements, including those that occur at the close of After-hours trading session and at the opening of the regular trading session on the following day, so as to ensure that if necessary, you can settle your positions or deposit additional margin in time.

 

16 July 2019