Published On: Sun, Aug 30th, 2009

HKEx First Half 2009 Summary

On August 9, 2009 the Hong Kong Exchanges Clearing Limited (HKEx) issued their unaudited and consolidated 6 month interim results ending June 2009. Here are the highlights.

* Average daily turnover value on the Stock exchange was HKD 58.3 billion down 33% from last year
* Average daily number of derivatives contracts trade on the futures exchange was up 12% to 213,630
* Average daily number of stock options contracts that changed hands on the Stock Exchange was 206,084 down 14%.

The Exchange group generated HKD 3,353 million (USD 429 million)in revenue down 20% largely due to the decrease in trading fees. Net profit amounted to HKD 2,200 million (USD 280 million) or HKD2.05 per share (down 26%). What hasn’t changed is the dividend payout ratio of 90% or HKD1.84 (USD 0.23). Seems the exchange values its shareholders more than its members.

During the first six months of 2009 there were 18 new company listings and 2 delistings on the mainboard bringing the total names for trading to 1103 with a total market capitalization of around HKD14,000 billion (USD 1.8 trillion). Total capital raised reached Other securities listed included 2,726 Derivative Warrants+, 1,620 Callable Bull/Bear Contracts, 7 Real Estate Investment Trusts, 30 Exchange Traded Funds (ETF) and 167 debt securities listed at the end of June 2009. The Growth Enterprise Market (GEM) will not be covered in this article.

The HKEx’s ETF market has continued to grow with the number of ETFs increasing to 30 with 6 new ETF listings in the second quarter of 2009. A further 5 additional ETFs covering stock markets in Hong Kong, India, Korea, Vietnam and the US were listed July 8, 2009.

The total futures and options contract volume declined 2% in the first six months of 2009 to 50,785,435
contracts with open interest decreasing to 4,322,095 contracts or 16%. The benchmark Hang Seng Index (HSI) futures and options contracts was a bright spot showing an increase of 10% in the first 180 days of this year when compared to the same period in 2008.

From 25 May 2009 the Central Clearing and Settlement System (CCASS) began issuing a new intra-day report to its Clearing and Custodian Participants to facilitate monitoring of intra-day settlement activities. The report is sent after the completion of the second batch settlement run at around 12:30pm.

T+2 Finality for Stock Exchange Trades
Securities traded on the Exchange are currently settled in CCASS on T+2 while the money settlement is completed in the morning of T+3. HKEx is planning to implement T+2 Finality for Stock Exchange trades to reduce the overnight counter party risk created by the settlement time gap. In conjunction with the Hong Kong Monetary Authority and Hong Kong Interbank Clearing Limited, a working model has been proposed to effect money settlement at the end of T+2 so as to bring finality of securities and money settlement for Stock Exchange Trades and Settlement Instructions on the same business day. No time frame for this implementation was given.

12 SEHK Participants and 15 HKFE Participants were newly admitted at the end of June 2009. The new participants include members from France, Hong Kong, India, Switzerland, Taiwan, the Mainland, the Netherlands, Britain, and the US. Total Exchange participants stands at 494 for the SEHK and 162 for the HKFE.

The HKEx boasted 100 per cent operational system uptime for all of its major infrastructure.
The Automatic Order Matching and Execution System/Third Generation (AMS/3) is being revamped to increase the order processing rate by 100 per cent to about 3,000 orders per second. Also, the Hong Kong Automated Trading System (HKATS) saw its hardware upgraded April 2009 further increasing capacity by 50 per cent to about 8,100 orders per second. Additionally, the CCASS/3 mainframe system software and database system is currently being upgraded with completion targeted in the third quarter of 2009. The HKEx will also upgrade the tunnel servers and central gateways hardware of the Derivatives Clearing and Settlement System (DCASS).

The black out periods applicable to the publication of annual and interim financial results increased to 60 days and 30 days, respectively. This came into affect April 1, 2009.

The full report including financial statements can be found here

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