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FIA responds to SFC consultation on Position Limit Regime changes

21 June 2022

FIA has responded to the Hong Kong Securities and Futures Commission’s consultation on changes to the Position Limit Regime.

FIA acknowledges that greater transparency can benefit the industry but stresses that data reporting requirements should always be meaningful. There should also be an appreciation of the practicalities of imposing such requirements, and the benefits should be commensurate with the resources needed to meet these requirements.

The response notes that the category of entities that can apply for increased position limits is narrow and suggests that it be expanded. For example, proprietary traders that use futures as a hedging tool will potentially need to trade more futures when the index value falls. However, they will be constrained by existing position limits and will not be eligible to apply for any increases.

FIA also requests that the SFC takes steps to ensure a greater level of harmonisation between the rules imposed by the SFC and HKEX so that market participants are not exposed to unnecessary operational and regulatory risks from having to observe different limits for the same product.

FIA makes other suggestions for consideration by the SFC – for example, carrying out an analysis of the volume of Holiday Contracts traded during Holiday Trading Days before the proposed reporting requirements are imposed, and makes requests for clarification on other proposals.

Read the full response here.

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