Can US CBBC trigger Mandatory Call Event during Hong Kong Trading Hours?

The mandatory call event (MCE) of US CBBCs depends on the spot price of the underlying. CBBCs issued by SG are listed on HKEx, where the US market is closed during Hong Kong trading sessions. Since spot prices only move during US market hours, MCE of US CBBCs will only be triggered during US market hours.

When futures price reaches the call price of the CBBC, issuer will continue to quote for the CBBC because the MCE will not be triggered by the move of the futures, but rather the spot. During the US trading hours, if the index spot reaches the call price of the CBBC, MCE will theoretically be immediately triggered. However, since Hong Kong market is closed during US trading hours, the MCE will be reflected before the market opens at the next Hong Kong trading session. If the next day happens to be a holiday in Hong Kong, the MCE will be reflected on the following Hong Kong trading day.

That said, investors are still able to exit their position even when the futures price drops below the call price of the bull or rise above the call price of the bear. In case of observing an averse price movement and would like to avoid being knocked out, investors can consider exiting their positions during Hong Kong hours.

US CBBC MCE Observation Period

As the Hong Kong trading session does not overlap with the US one, investors should aware the observation period for MCE under difference scenarios:

Scenario（1）：At listing day – Observe the US close price preceding the listing day

Scenario（2）：Every trade day after listing – Observe the whole of previous US trading session

Scenario（3）：Holiday in Hong Kong – Observation of previous US trading session is still needed, and the MCE (if so) before the next Hong Kong trading session opens.

Scenario（4）：If the previous day is a US holiday, the US trading session of the day before will be observed

Scenario（5）：Observe until the close of the US trading session preceding the last trading day of the CBBC.