The Hong Kong stock exchange is planning on further expanding its exchange-traded product (ETP) offering following the launch of a new spread table and continuous quoting market making obligations this Monday. In an interview with Bloomberg, Head of Exchange Traded Products Brian Roberts told the news outlet that Hong Kong Exchanges & Clearing Ltd. (HKEX) is considering four new types of ETPs.
These will include leveraged and inverse products which track mainland China A share indexes, as well as fixed income exchange-traded funds (ETFs) and sectoral and thematic ETFs with underlying Chinese assets with an environmental, social and governance investing strategy, Roberts said in the interview.
Furthermore, Roberts explained that the ETPs tracking mainland indexes would be the “next source of innovation and diversification”. He also highlighted to the news outlet that the uptick in investor interest in the US for fixed income and ETFs will also come to Asia.
HKEX: Hong Kong to be Asia’s ETP marketplace
This Monday, as previously announced by HKEX, the exchange operator introduced a new spread table and continuous quoting market making obligations for ETPs. The new initiatives, as previously highlighted by the exchange, are part of its ongoing mission to develop Hong Kong into Asia’s ETP marketplace.
“The new spread table and market making obligations are HKEX’s latest moves in a series of market structure changes to enhance the liquidity of Hong Kong-listed ETPs,” Roberts said in a statement earlier in May. “We believe these enhancements will make Hong Kong-listed ETPs a more cost efficient way for investors in Asia to access the world’s capital markets.”
In its three-year plan, HKEX is aiming to diversify its offering from equities, which has been its main focus. On the 15th of May, the Government of Hong Kong published a regulation to waive the stamp duty on stock transfers for ETP market makers in the course of creating and redeeming ETP units listed in Hong Kong.
According to a statement from the stock exchange in May, this regulation will come into effect on the 1st of August 2020 and will help lower the transaction cost of ETP activities in the primary market.
As of the 30th of April this year, there were 131 ETPs listed in Hong Kong’s ETP market. Out of this, 24 were Leveraged and Invest Products. Overall, the ETPs represented a combined market capitalisation of $295 billion.