In an effort to better compete with global markets, Hong Kong's Financial Services Development Council issued a report on Feb. 26 proposing that a hedge exemption be included in Hong Kong's position limit regime. The report noted that Hong Kong is the only market with no hedging exemptions for market neutral transactions of qualified market users. The council is a high-level, cross-sector group that advises the Hong Kong government on areas related to the financial services industry.
"Hong Kong’s very restrictive position limits for derivatives are not aligned with those of other major international financial centers, with the result that some exchange transactions have flown to other markets," the report stated.
