Hong Kong stock slump hits CBBC desks

Surging volume and rising leverage expose issuers to gap risk on hedges

Once bitten, twice shy, the saying goes. So what happens when you are bitten twice? Are you three times shy, or four times? Equity exotics traders in Hong Kong will have to come up with an answer.

Issuers of callable bull and bear contracts (CBBCs) – listed instruments that track the performance of an underlying asset and knock out at predetermined levels – have been caught out on two occasions already this year. While losses have been manageable so far, increased competition in the market is

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