Hong Kong Exchanges and Clearing Limited (HKEX) has enhanced the designated specialist (DS) programme for its exchange-traded products (ETPs), which include exchange-traded funds (ETFs).
The programme has been enhanced to permit global liquidity providers that are not its securities market makers (SMMs) to participate in ETP market making activities.
According to HKEX, 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.
To become a DS, participants must be a corporate client of an SMM.
Participants must also have 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.
Alternatively, it should be an entity which is a licensed bank regulated by an authority acceptable to HKEX, or an entity which has maintained a current long-term credit rating of A- or above (Standard & Poor’s) or A3 or above.
A participant can also be eligible if it has maintained a paid-up capital of at least $50,000,000 and shareholders' funds of at least $100,000,000.
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.”
He added: “This is an important step in providing investors with a globally competitive ETP marketplace in Asia.”
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