Hong Kong SFC Proposes to Revise Position Limits for Stock Options and Stock Futures

The Securities and Futures Commission (SFC) has published consultation conclusions and began a further consultation on proposed changes to the position limit regime.

Considering market feedback to the consultation, the SFC concluded to proceed with some of the proposals to better align the position limit regime with the SFC's regulatory policies and objectives in light of recent developments in Hong Kong's derivatives market. These include expanding the list of specified contracts and introducing an excess position limit regime for clearing participants.

The SFC is launching a further consultation on additional amendments related to the application of position limits and reporting requirements to funds. It also proposes to revise the statutory position limits for stock options and stock futures contracts and remove the additional position limits for mini stock index futures and options contracts.

"The primary objective of establishing statutory position limits is to contain systemic risk in the Hong Kong market by limiting large positions," said Mr Ashley Alder, the SFC's Chief Executive Officer. "The position limit regime is crucial in maintaining the stability of the Hong Kong financial market and it should be regularly updated to reflect market developments."

Separately, after a carefully considered policy review, to facilitate market development, the SFC will adopt a separate regulatory approach for international futures and options contracts by not prescribing the statutory position limits and large open position reporting levels for these contracts (excluding Mainland-related and Renminbi currency contracts).