SFC concludes consultation on position limit regime

21 Mar 2017



The Securities and Futures Commission (SFC) today published conclusions to a consultation to expand the scope of the position limit regime (Note 1).

After considering market feedback, the SFC has concluded that the proposals as set out in the consultation will be implemented. These include a 300% cap on the excess position limit that may be authorized by the SFC, a statutory position limit of 150,000 contracts for stock options as well as new excess position limits for index arbitrage activities, asset managers and market makers of exchange-traded funds (Note 2).

In light of market responses, the minimum "assets under management" requirement applicable to asset managers will be lowered from $100 billion to $80 billion (Note 3).

Subject to the legislative process, the SFC plans for the amended rules to come into effect on 1 June 2017 (Note 4).

End

Notes:

  1. On 20 September 2016, the SFC released a consultation paper to enhance the position limit regime including corresponding amendments to the Securities and Futures (Contracts Limits and Reportable Positions) Rules (CLRP Rules) and the Guidance Note on Position Limits and Large Open Position Reporting Requirements. The consultation ended on 21 November 2016.
  2. Under the position limit regime, an exchange participant or its affiliate may seek authorization from the SFC to hold or control Hang Seng Index and Hang Seng China Enterprises Index futures and options contracts in excess of the statutory limit for the purposes of hedging risks that arise in the course of providing services to clients.
  3. An asset manager must satisfy various criteria to be eligible for the proposed asset manager excess position limit, including the minimum "assets under management" requirement.
  4. The proposed amendments to the CLRP Rules will be submitted to the Legislative Council for negative vetting before the end of March 2017.


Page last updated : 21 Mar 2017