Futures exchange seeks credit rating
The Hong Kong Futures Exchange would seek a credit rating to enhance its appeal to international investors, outgoing chairman Frank Wong Kwong-shing said yesterday.
The move followed in the footsteps of established international market practice, with exchanges such as the United States' largest clearing house - The Option Clearing Corp - obtaining a AAA rating, he said.
'The credit rating would make it easier for international investors to assess the risk management and financial strength of the exchange,' he said.
He said the exchange would apply to credit rating agencies Standard & Poor's and Moody's Investors Service soon.
Mr Wong pointed out the exchange had a capital base of $1.15 billion last year - almost twice the $545 million reported in 1995.
The capital base is made up of the exchange's retained earnings and ensures there are sufficient funds available to withstand a large number of brokers' defaulting in times of market turmoil.
Meanwhile, Mr Wong said the exchange wanted to expand its product range and was planning to launch individual Asian country interest rate futures.
'Due to the current financial turmoil and uncertainty in the interest rate market, I think there is a lot of hedging needs for interest rate futures,' he said.
'Hibor futures have reached a record high trading volume recently due to uncertainty in interest rate trends.' He said the exchange would also like to launch a Korean stock index product soon and would introduce other products to enable the exchange to become the mainland's derivatives trading centre.
Mr Wong, who has been exchange chairman for three years, is to step down on June 25 during the exchange's annual meeting.
He supported vice-chairman Geoffrey Yeh Meou-tsen to be the next chairman as he said Mr Yeh had been on the ruling board for a long time.
