Introduction ofHong Kong ETP Market

Exchange Traded Products

March 2023

Hong Kong ETP market in numbers

HKDHKD

12172

bnAverage daily turnover

Products

Market Capitalisation

Marketmakers

Issuers

162ETPs
1 - Source: HKEX as of 30 December 2022

bn34

252384

Development of HKEX ETP market
Number of ETPs and AUM(Number of ETPs)11891724

1999

2005

2006

2007

2008

6977

2010

2011

432009100

2012

First gold ETF

First ETF listed inHong Kong

116

122

133

145

133

137

128

2013

2014

201520162017

2018

2019

First futures-basedETF
First oil ETF & first L&I ProductFirst RQFII A-share ETF(globally) &first dual counter ETF2287

2011

2012

2013

2021

304306

2014

2015

172

2022

First Metaverse ETF
First Carbon FuturesETF
First Green BondETF
First Virtual AssetETF

First MSCI China A 50 Connect ETF
First pure play Hong Kong biotech ETF
First cross-listed ETF from Shanghai

393363282

2020

First HSI / HSCEI L&I
Products & first FoF ETF3

(Market Capitalisation in HKD billions)1243

153

First Active ETF& first -2x Inverse
ProductFirst Active Equity ETF
First Iron Ore Futures ETF
First Master-feeder structure ETF
First ESG A-Share ETF
First A-Share L&I ProductsFirst Hang Seng TECH Index ETF

309

146289314311

2017

2018

2019429384

188

3106105

20072008

2009

2010

1 - Source: HKEX as of 30 December 2022
2 - “RQFII” refers to RMB Qualified Foreign Institutional Investor
3 - FoF refers to Fund-of-Fund

2016

2020

2021

2022

HKEX ETP product diversity (2016 vs 2022)
Product innovation has accelerated in the last three years – moving HK closer to a “one-stop” shop

PRIOR TO 2016

Hong Kong

ASEAN

Smart Beta

Virtual Asset

China
Thematic

Hong Kong
L&I

BondGlobal
Thematic

Iron OreOverseas
Equity L&I

A-shares L&I
ProductOilEmerging
Markets

ESG

China Bonds

Carbon Futures

GoldA-shares

Asia Pacific

NEW EXPOSURES

Money Market

US/Europe-2x-2x Inverse
Product

Increasing diversification from investor demand reflected in top fund flow products

Fund flow (HK$M)

Top 10 ETPs by fund flow1
41,532

10,782

CSOP
Tracker Fund ofHang Seng TECH
Hong Kong
Index ETF

47,158HSCEI
Index ETF

4,956

4,583

3,345

iShares
CSOPiShares Core
Hang Seng TECH Hang Seng TECH MSCI ChinaETF
Index Daily (2x)
Index ETF
Leveraged Product

2,799

2,103

1,870CSOPCSOPiShares
FTSE A50 China Hang Seng TECH HSI Daily (2x)
Index Daily (-2x)
Leveraged
Index ETF
Inverse ProductProduct

Diversified access to a wide range of asset classes, sector, geographies & innovative strategies
1. Fund flows for the period of January – December 2022 from Morningstar

1,284
Hang Seng TECH
Index ETF

Overview of Hong Kong ETP Turnover
Our turnover has grown over the past 11 years
ADT (In HK$ million)

11 year CAGR = 17%

12,000

8,789
7,717
6,406

4,727

4,130

3,701

4,713

4,460

2017

2018

4,951

2,114

20122013

2014

2015

2016

2019

2020

2021

A closer look to the distribution of turnover in 2022

Next
5 5Next13%

Rest3%20222

TopTop5 584%

51 - Source: HKEX as of 30 December 2022

ETP NameUnderlying
Market2022 ADT YTD(HK$ million)

Tracker Fund of Hong Kong

Hong Kong

4,124

Hang Seng China Enterprises Index ETF

Hong Kong

3,424

CSOP Hang Seng TECH Index ETF

Hong Kong

1,375

Hong Kong

592

Hong Kong

578

CSOP Hang Seng TECH Index Daily(-2x) Inverse Product
CSOP Hang Seng TECH Index Daily(2x) Leveraged Product2022

Top 10 ETP Turnover Distribution% of turnover
Top 597%
Next 51%2016

Rest2%

2022 YTD1 Top 10 ETPs by average daily turnover
ETP Name

Underlying Market

2022 YTD ADT(HK$ million)

2016 ADT &Ranking(HK$ million)

Tracker Fund of Hong Kong

HK Equity

3,681

1,476 (1)Hang Seng China Enterprises Index ETF

HK Equity

3,335946 (2)CSOP Hang Seng TECH Index ETF

HK Equity

1,164

N/A

L&I: HK Equity

481

N/A

L&I: HK Equity

475

N/A

CSOP HSI Daily (2x) Leveraged Product

L&I: HK Equity

408

N/A

CSOP HSI Daily (-2x) Inverse Product

L&I: HK Equity

398

N/A

ChinaAMC CSI 300 Index ETF

A-Share166

260 (5)iShares Hang Seng TECH ETF

HK Equity

149

N/A

CSOP FTSE China A50 ETF

A-Share149

727 (3)

CSOP Hang Seng TECH Index Daily(2x) Leveraged Product
CSOP Hang Seng TECH Index Daily(-2x) Inverse Product6%

Top 583%

11%

Next 511%

2022
YTD1Rest
6%83%

6Source: HKEX
1 – YTD Data as of 30 September 2022

Market Structure Enhancements on ETFs
Several crucial enhancements have been introduced to the Hong Kong ETP market in the recent years

1Launched 1 Aug 2020

Launched 2 Jan 20194

Waive stamp duty on stock transactions ofmarket makers in relation to their creation
and redemption activities

Attract global liquidity providers toHong Kong ETP markets

AIM: Broaden liquidity base of ETPs

AIM: Lower cost for creation/redemption

2

Give market makers an extra day forcovering liquidity provisioning positions

Buy-inExemption

Launched 1 Jul 2019

AIM: To relieve market structure
constraints for market makers toprovide liquidity continuously overthe day

3Lower
Trading CostsFixed Income &Money Market Fee
WaiverLaunched 1 Jun 2020
Introduce tightened market making
obligations and spread table with smallertick sizes

Trading Fee
Exemptionand support liquidity in ETPs

Launched 31 May 2021
Exemption of trading fee for ETP
market makers classified based on
ADT

AIM: Appropriately incentivize marketmakers and promote trading ofilliquid ETPS

Launched 3 May 2022
Safeguard market integrity from extreme
price volatility arising from trading incidents

AIM: Avoid extreme volatility in the trading of

AIM: Enhance market making quality andreduce trading spreads
7ETFs during Continues Trading Session

65

The Inclusion of ETFs is a Significant Milestone
in the Evolution of Stock Connect

8

ETF trading in Stock Connect is gaining momentum

Source: HKEX. Data as of 28 February 2023. Turnover is calculated as buy value + sell value.

9Crypto Asset ETFs product scope

Source: HKEX. Data as of 31 December 2022. Turnover is calculated as buy value + sell value.

10

Benefits
Asia’s First Virtual Asset ETFs

Be Asia’s first and leading exchange in
Virtual Asset ETFs, providing unprecedented
exposure to alternative investments

Quick and Easy Access to VA

Direct, easy and immediate access to VA
exposures through local broker accounts

Trade safely via recognized exchange

Creating New Digital Ecosystem

Virtual Asset ETFs is a great step increating a new digital ecosystem,aligning with our strategy to develop
digital capabilities of the future

Global Ethereum ETF Trading Venue
First IFC globally offering Ethereum
VA ETFs
Attract international investors toaccess unique product

Crypto Asset ETFs will enhance Hong Kong’s competitiveness as world’s leading ETF marketplace

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Disclaimer

The information contained in this document is for general informational purposes only and does not constitute an offer,solicitation or recommendation to buy or sell any securities or other products or to provide any investment advice or serviceof any kind.
This document is solely intended for distribution to and use by professional investors. This document is not directed at, and is
not intended for distribution to or use by, any person or entity in any jurisdiction or country where such distribution or use
would be contrary to law or regulation or which would subject Hong Kong Exchanges and Clearing Limited, The Stock
Exchange ofHong Kong Limited (“SEHK”) (together, the “Entities”, each an “Entity”), or any of their affiliates, or any of the companies
that they operate, to any registration requirement within such jurisdiction or country.
No section or clause in this document may be regarded as creating any obligation on the part of any of the Entities. Rights
and obligations with regard to the trading, clearing and settlement of any securities effected on SEHK shall depend solelyon the applicable rules of SEHK and the relevant clearing house, as well as the applicable laws, rules and regulations ofHong Kong.
Although the information contained in this document is obtained or compiled from sources believed to be reliable, neither ofthe Entities guarantees the accuracy, validity, timeliness or completeness of the information or data for any particularpurpose,and the Entities and the companies that they operate shall not accept any responsibility for, or be liable for, errors, omissions
or other inaccuracies in the information or for the consequences thereof. The information set out in this document isprovided on an “as is” and “as available” basis and may be amended or changed. It is not a substitute for professional advice
which takes account of your specific circumstances and nothing in this document constitutes legal advice. Neither of theEntities shall be responsible or liable for any loss or damage, directly or indirectly, arising from the use of or reliance upon
any information provided in this document.

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