Hong Kong Exchanges and Clearing : After-Hours Trading (T+1) Extension Proves Popular with Investors

Trading of Hong Kong Exchanges and Clearing Limited's (HKEX) four most active equity index futures increased 17 per cent to an average daily volume of over 32,000 contracts in the past two weeks since the enhancement to after-hours trading (AHT) was introduced on 6 November 2017.

The T+1 Session of Hang Seng Index (HSI), Hang Seng China Enterprises Index (HHI), Mini-HSI and Mini-HHI futures has been extended from 11:45 pm to 1 am the following day. The session continues to open at 5:15 pm.

Since the rollout of the enhancement, more than 90 per cent of Hong Kong Futures Exchange Participants (EPs) (112 out of 124 EPs) participating in the equity index futures T+1 Session also participated in the extended trading hours from 11:46 pm to 1:00 am. The overall trading volume has increased 17 per cent when compared to the 2017 year-to-date daily average up to 3 November, with most of the increased volume coming during the newly extended trading hours. The average percentage of AHT volume attributed to the T-session also reached 13.3 per cent in the past two weeks, compared with 10.3 per cent prior to the extension.

Over the past two weeks, per-hour average trading volume was over 5,800 contracts in the T+1 Session from the US market opening at 10:30 pm Hong Kong time until the close of the session, 72 per cent higher than the same trading session's per-hour average volume concluded in the period before the US market opens (ie between 5:15 pm and 10:30 pm Hong Kong time). This reflects investors' needs for trading hours that overlap with the US market so they have more coverage to respond to news in the US time zone.

'The extended T+1 Session gives us a longer overlap with the US markets' trading hours, allowing our market users more time to trade in response to news or market events in North America,' said Roger Lee, HKEX Joint Chief Operating Officer and Head of Markets. 'The extension, along with our plans to include equity index options in the enhancements next year, will provide market users with more choices and greater flexibility for risk management and investment.'

The extension to 1:00 am marked the first phase of HKEX's AHT enhancements. The second and third phases of the enhancements are scheduled for the first and second halves of 2018 respectively.

Inclusion of equity index option contracts and a trading halt mechanism for equity index options in the T+1 Session (first half of 2018) will be implemented in Phase 2. In Phase 3, trading will be extended from 1:00 am to 3:00 am of the T+1 Session and alignment of the T+1 Session Cutoff Time (the deadline for system input of post-trade after the T+1 Session) with the close of trading hours (fourth quarter of 2018).