HKEX ENHANCES DESIGNATED SPECIALIST PROGRAMME FOR EXCHANGE TRADED PRODUCTS

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Hong Kong Exchanges and Clearing Limited (HKEX) today (Wednesday) enhanced the Designated Specialist (DS) programme for its Exchange Traded Products (ETPs), which include Exchange Traded Funds (ETFs) and Leveraged and Inverse (L&I) Products, to permit global liquidity providers that are not its Securities Market Makers (SMMs) to participate in ETP market making activities.

With expanded eligibility criteria and a more flexible structure, the enhanced DS programme opens up new opportunities for non-SMMs to enter Hong Kong’s growing ETP market while increasing the range of potential liquidity providers.

Brian Roberts, HKEX’s Head of Exchange Traded Products, said: “The enhancement to the DS programme allows non-SMMs to expand their market making presence in Asia and further deepen the liquidity pool in Hong Kong ETPs.  This is an important step in providing investors a globally competitive ETP marketplace in Asia.”

To become a DS, participants must be a corporate client of an SMM and satisfy at least one of the following conditions: 

  1. it is an entity licensed by or registered with the Securities and Futures Commission (SFC) for Type 1 or Type 2 regulated activities under the Securities and Futures Ordinance, or licensed or registered for similar activity by an overseas authority having a memorandum of understanding with the SFC for the sharing of market surveillance information;
  2. it is an entity which is a licensed bank regulated by an authority acceptable to HKEX;
  3. it is an entity which has maintained a current long-term credit rating of A- or above (Standard & Poor’s) or A3 or above (Moody’s); or
  4. it has maintained a paid-up capital of at least $50,000,000 and shareholders’ funds of at least $100,000,000.

Further information on the DS registration process is available on the HKEX website.

In addition to the enhancements to the DS programme, the experience requirement as part of SMMs’ eligibility for L&I Products is removed with effect from today.

For details of the enhancements in the DS programme and the relaxation of the experience requirement for SMMs for L&I Products, please refer to the circular on the HKEX website.

Source: HKEX