Hong Kong Exchange, MSCI Are Said to Plan New Asian Futures

(Bloomberg) -- Hong Kong Exchanges & Clearing Ltd. is working with index compiler MSCI Inc. to create futures contracts that would track hundreds of Asian companies, a broadening of the bourse’s offerings as it looks to build its derivatives business.

HKEX and the New York-based firm are looking at a product tied to the MSCI AC Asia ex-Japan Index, according to a document obtained by Bloomberg. The gauge tracks nearly 650 companies based in Asia excluding those from Japan, and would mark a departure for HKEX, which has mostly offered contracts linked to stocks in Hong Kong and mainland China. MSCI hasn’t had any futures listed in the former British colony since 2004.

Charles Li, HKEX’s chief executive officer, has said he wants the company’s derivatives market to be more competitive. Singapore Exchange Ltd.’s futures venue features contracts linked to stocks around the world, including India, Japan and Taiwan. Derivatives were about 18 percent of HKEX’s total revenue last year, according to data compiled by Bloomberg, while SGX’s derivatives revenue accounted for 38 percent of the total in its fiscal 2017, the data show.

“HKEX is constantly exploring ways to expand our suite of derivative products, including futures contracts, to meet market demand,” spokesman Jeffrey Ng said in response to questions. “HKEX will update the market when there are further developments.”

Jenny Jia, spokeswoman for MSCI, declined to comment.

There is no start date for the contracts, and the plan requires regulatory approval, according to the document.

Tthe top-weighted firms on the MSCI AC Asia ex-Japan Index are Hong Kong-listed Tencent Holdings Ltd. and Alibaba Group Holding Ltd., which trades in New York. South Korea’s Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co. also feature.

©2018 Bloomberg L.P.