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FAQs
Hong Kong Futures and Options

1. What are Futures and Options?

Futures and options are two types of derivatives.
Their structure and the way they work are complicated, and involve leverage. They are high risk and not suitable for inexperienced investors or people who are less risk tolerant.

Futures are financial contracts for underlying assets, such as stock, market index, currency or commodity. The underlying assets are bought or sold at an agreed price today, for a set date in the future.

You can trade futures on the HKEX. You can buy or sell them with a margin deposit, which only partly covers the value of the contract. Going into leverage can increase the size of your gain or loss. Trading futures can be risky as a broker can make a margin call. This means you must put in more cash or securities to cover the shortfall of your margin deposit in case the price of the underlying asset moves against your view. The loss could be much more than your margin deposit.

Options are financial contracts that give the buyer the right to buy or sell an underlying asset (stock, market index, currency or commodity) from the seller at a set price within a certain time.

You can trade options on the HKEX. The risks and returns of the option buyer and seller are different. If you are the buyer, the maximum loss is the premium you pay to the seller. If you are the seller, you get the premium. But you must also make a deposit as a guarantee to go ahead to buy or sell the underlying asset. Like futures trading, the option seller faces the risk of a margin call. Again, the loss for the seller could be much more than the premium.

2. Margin control?

When do I need to deposit the required margin call amount?
A margin call will be initiated by CCL via email and/or telephone when the net balance of the electronic trading account falls below the maintenance margin. You should either (a) deposit the required margin call amount; or (b) transfer fund from other trading account(s) among CFSG within the margin call period; or (c) close out position, otherwise his/her position would be compulsorily closed out by CCL.

3. Does CCL have right to close their clients' open position(s)?

Yes. (a) If client could not meet the margin call within the specific settlement period, CCL will reserve the right to close out client's open position(s). Or (b) If market fluctuates during the specific settlement period and client's open position(s) with value falls to 20% or below of the initial margin, his/her open position(s) will be closed out by CCL. CCL will send e-mail to client in acknowledgment of the closed out position.

4. Are stock futures with contract size equal to one underlying board lot shares?

Not necessarily. Some stock futures contractsequal to one underlying board lot shares, and some stock futures contractsare more than one underlying board lot shares. Customer can obtain relevant information by browsing HKEX website or download "HK Futures Margin" from our website.

5. Is there any price limit up/down mechanism in the After-Hours Futures Trading Session (T+1)?

HKEX has set the percentage for the price limit up/down at 5% in the After-Hours Trading Session (T+1).

6. What is the meaning of 5% price limit up/down Mechanism?

It means no sell order of price below 95% and no buy order of price above 105% of the last traded price of the spot month contract in the T Session will be allowed. Trading (for all contract months) will be allowed only within the price limit range during the T+1 session. Moreover, trading in the T session will not be subject to this price limit up/down mechanism.

7. Why can't I change or delete orders on Hang Seng Index (HSI), Mini-Hang Seng Index(MHI), H-shares index (HHI) and Mini H-shares index (MCH) during the price-opening session?

Pre-Opening	Morning Session 8:45 a.m. - up to 9:10 a.m. (random cutoff start from 9:09 a.m.) Afternoon Session 12:30 p.m. – up to 12:55 p.m. (random cutoff start from 12:54 p.m.)	Accept auction orders, limit orders and inactive orders Orders may be modified or cancelled Both limit orders and auction orders can affect the COP
Pre-Open Allocation	Morning Session After cutoff – up to 9:13 a.m. (random cutoff start from 9:12 a.m.) Afternoon Session After cutoff – up to 12:58 p.m. (random cutoff start from 12:57 p.m.)	Accept auction orders and inactive orders Order modification or cancellation as well as activation of inactive orders are not allowed Only new auction orders can affect the COP
Open Allocation	Morning Session After cutoff – 9:15 a.m. Afternoon Session After cutoff – 1:00 p.m.	No input, modification or cancellation of active auction orders or limit orders Only input of inactive orders allowed Orders will be matched according to order type, price and time priority at the COP at the end of the session If COP exists, unmatched auction orders will be converted to limit orders at the COP If COP does not exist, unmatched auction orders will be converted to limit orders at best bid and ask prices If COP does not exist and no best bid and ask price in the market, unmatched auction orders will be inactivated and reside in the Central Orderbook Users cannot change or delete orders during the 2-minute Open Allocation session