Feedback
A well-planned contract will increase the liquidity of the commodity, particularly in the context when contracts currently available to market participants do not adequately address users’ risk exposures. HKMEx will introduce tailor-made contracts catering to end user demand that will enable traders, investors and industry players to hedge commodities price risks in a fair and transparent manner. Key to this is the product development process. Product Development is conducted in five phases: Concept Generation, Analysis, Development, Marketing and Post-Implementation Product Feedback.
Deep understanding of both commodities market trends and the needs of trading members is key to identifying new products. The Product Development division is responsible for conducting detailed market analysis and collaborates with leading industry experts to identify potentially underserved markets. The product team will continuously review the performance of existing products to analyze their strengths and weaknesses. To improve liquidity and volumes, we will perform extensive independent research and seek feedback from trading members to introduce or modify product features to enhance the attractiveness and liquidity of HKMEx contracts. This approach is critical, as some of the world’s most liquid products require multiple iterations before becoming global benchmark contracts.
To determine the viability and market potential of a new product, Product Development team reviews several key factors. These factors include the particular commodity demand in the region, the existence and vitality of a spot/cash market and the existence and vitality of an OTC market. In general, gaps in any of the factors above may present a market opportunity. The product development team critically analyzes the overall market size, current and expected competition, demand level from members, key specifications, delivery points as required and projected revenue opportunity to determine the viability of any potential product.
Once a product is determined to be attractive for launch, the Product Development team produces a detailed timetable for development which highlights the key milestones required to launch a new product. Product specifications are developed with end users in mind and require input from a focus group of key members who would likely be the most active traders of the new product.
The completion of a product design is the beginning of its appearance to the market. The Marketing team will begin to promote the new product . These activities include, among others, face-to-face meetings with the financial community who will participate in the trading of this product; roadshows to introduce this product to different target audiences; meeting with major industry players to gauge their buy-in; education tutorials and media activities to increase the exposure of this product to the financial community and public.
The Product Development team will gather feedback from users on the contract specifications and trading & delivery features, internal feedback via MIS and regulator reports and monitor market indicators through trading volume, open interest and so on. This information will help the Exchange to further polish its product offerings and services.
