After-hours futures trading

Introduced by the Hong Kong Exchanges and Clearing Limited (HKEX) on 8 April 2013, After-Hours Futures Trading (AHFT) is an extended trading session for futures contracts, from 5:15pm to 11:45pm for stock index futures and RMB currency futures and from 5:15pm to 1:00am of the next day for commodity futures.

Find out more about the trading hours of derivative products here.

• AHFT is a T+1 session, which means trading during the session will be cleared and settled on the following trading day. Investors should check with their brokers the arrangements for trading, settlement and the issuance of contract notes and statements of account.
• A 5% price limit up/down mechanism is introduced during the AHFT session. Sell orders with a price below 95% of the last traded price for the spot month contract in the regular trading sessions and buy orders with a price above 105% will not be allowed. The upper and lower price limit applies to all contract months. Although there will not be suspension of trading, investors will not be allowed to trade at prices outside the price limit. Find out more about the price limit mechanism here.
• No AHFT will take place if:
  - It is a Hong Kong public holiday, there is half-day trading in the HKEX securities market or it is a bank holiday in both the UK and US.
  - Typhoon signal no. 8 or above or a Black Rainstorm Warning is in effect after 12 noon.

HKEX makes a mandatory variation adjustment and margin call to the brokers after the opening of the regular trading session on the next trading day based on that day's Calculated Opening Prices. The brokers are required to make up the mark-to-market losses and margin shortfall (if any) by 12:00 noon on that day.

An additional risk management measure in the form of a 5% price limit has also been introduced to address concerns about any unusual volatility in the AHFT session.

HKEX and the Securities and Futures Commission (SFC) closely monitor the trading and clearing operations and risk management arrangements of AHFT.

Investors should contact their brokers to understand whether any additional risk management measures are introduced by the brokers.

You can check with your brokers if they offer AHFT services. If your broker does not offer AHFT services, in the event of any extreme market movements during the AHFT session, you may not be able to manage your existing positions until the opening of the regular trading session on the next business day.

To participate in AHFT, you should check with your brokers the arrangements for trading, settlement and the provision of contract notes and statements of account. You should also find out details about the margin requirements by your brokers and make sure that margins can be deposited (e.g., by bank fund transfer), where applicable, to the brokers during AHFT.

To ensure sufficient trading liquidity during AHFT, HKEX has appointed some liquidity providers to provide quotes at the initial stage of the implementation of AHFT. That means abnormal price deviations can be adjusted by market forces.

Setting the price limit of +/-5% may also be helpful in preventing excessive price movements during AHFT.

Market manipulation is a criminal offence in Hong Kong. As with other trading sessions, all trading activities in the after-hours session are closely monitored by both HKEX and the SFC.

As with futures transactions during the regular trading sessions, you should closely monitor your margin level and review whether you are able to maintain your positions during AHFT. You should:

• Closely monitor the level of client margin imposed by HKEX and brokers
  As HKEX has imposed a 5% up/down price limit for buy and sell orders of futures during AHFT, client's margin should be able to cope with normal market fluctuations. However, when the market is volatile, HKEX and/or your brokers may increase the margin requirement. You should keep track of the related arrangements made by HKEX and the brokers.
• Clarify the client margin requirements and if any trading limit has been set
  Some brokers may set a higher margin level for clients or impose trading limits to clients according to their financial strength. You should clarify with the brokers the margin you should maintain, the trading limit if any and the detailed arrangements for you to pay and for brokers to call margin.
• Ensure that funds can be instantly transferred during AHFT
  Some brokers might require their clients to deposit additional margin funds instantly (e.g., via online banking transfer facilities, ATM or PPS) to safeguard clients' positions, if considered necessary, during the after-hours session.

For investors trading only during the regular trading session but maintaining open positions overnight, it is possible that brokers may contact you to top up margin taking into account market conditions. Therefore you should ensure that sufficient margins are in place.

Whether you are trading futures during the regular or the AHFT session, you should:

• Fully understand the margin requirements and the arrangements in relation to forced closure of positions because your broker may close your position without prior notice if margin level maintained in your account is insufficient.
• Watch out for price movements, including those that occur at the close of after-hours session and at the opening of the regular trading session on the following day, so as to ensure that if necessary, you can settle your positions or deposit additional margin in time.