Trading Rights - Frequently Asked Questions
Application for a new trading right
Q1: What is a trading right and what is the difference between a Stock Exchange trading right and a Futures Exchange trading right?
A1: A trading right issued by The Stock Exchange of Hong Kong Limited confers the right on the holder to directly deal in stocks, exchange traded funds, bonds, trusts, structured products (e.g. derivative warrants, and CBBC) and stock options listed on the Stock Exchange of Hong Kong. A trading right issued by Hong Kong Futures Exchange Limited confers the right on the holder to directly deal in index futures, index options and other derivative product traded on the Hong Kong Futures Exchange.
Q2: How many additional trading rights can I apply for?
A2: There is no limit on the number of trading rights that can be held by a trading right holder or Exchange Participant. However, only one trading right is required for trading on each Exchange.
Q3: How much will I be charged for a new trading right?
A3: Upon receiving your application, a tender will be conducted by the Exchange to invite existing trading right holders to relinquish their transferable trading rights. The lowest tendered price will be the issuance fee for the new non-transferable trading right. If no valid tender is submitted, the Exchange will issue a new trading right at the then prevailing issuance fee set by the Exchange. The tender price will not be more than the prevailing issuance fee set by the Exchange.
Q4: How much is the issuance fee and the tender administration fee?
A4: The issuance fee set by the Exchange is HK$500,000 per trading right and the tender administration fee is HK$50,000 per trading right application. Interested parties should refer to the application form or the tender form for the latest fees.
Q5 : How long does it take to apply for a trading right?
A5 : Once we have received a completed application form and all the required documents, a tender will be conducted. It will normally take less than two weeks to complete the tender process. You will be notified by e-mail, fax, or post whether your application has been successful and the trading right will be available to the applicant subject to terms and conditions stipulated in the application form.
Q6: Can I withdraw my application for the trading right?
A6: Once an application form is received by the Exchange, any subsequent request for withdrawal will not normally be accepted. The application will usually be processed within less than two weeks. Applicants are advised to consider carefully the terms and conditions in the respective application forms before submitting their applications.
Q7: Are trading rights issued prior to, at the same time, or after approval to be an Exchange Participant?
A7: The trading right is issued at the same time that an applicant is admitted/registered as an Exchange Participant with the Exchange.
Q8: Can a new trading right issued in the tender process administered by HKEx lapse and, as a result, the issuance and administration fees be forfeited?
A8: Yes. If the applicant is not able to be licensed by the Securities and Futures Commission (SFC) for dealing in securities/futures contracts with respect to its trading right and Exchange Participantship within six months after the announcement of the tender result, its trading right and the related issuance and administration fees will usually be forfeited. (Note: SFC licence Type 1 is for Stock Exchange Participantship and Type 2 for Futures Exchange Participantship. Applicants should refer to the SFC for the latest licence type.)
Tender for relinquishment of trading rights
Q9: Is it necessary that the trading right be transferable?
A9: Only transferable trading rights as defined under the Exchange Rules are accepted for tender. A transferable trading right is a trading right that was granted under the Stock Exchange Scheme or Futures Exchange Scheme and that has not been transferred or deemed to have been transferred.
A transfer of a trading right may be deemed to occur if there is a change in control of the company (or of any holding company of such company) which holds the trading right, where the company which holds the trading right is not, at the time of the change in control, an Exchange Participant. If the tenderer is a corporate non-Exchange Participant trading right holder, it shall be required to submit a statutory declaration that it has not implemented any change in control since 6 March 2000 or since it ceased to be an Exchange Participant.
Q10: What is a trading day?
A10: A trading day is a day when the Exchange is open for trading.
Q11: What is a distinctive number?
A11: When you register with the Exchange as a trading right holder, a trading right certificate will be issued to you. Other than the certificate number, there will also be another unique number, called the distinctive number, printed on the certificate.
Q12: How do I know that my tender is selected?
A12: The tender result will be posted on the HKEx website as soon as a successful tenderer is selected and confirmed. Successful tenderers will also be notified by HKEx.
Q13: When does a successful tenderer have to relinquish its trading right?
A13: Relinquishment must be completed within six months from the date of notification of the tender result.
Q14: When can a transferable trading right holder submit a tender again?
A14: A holder who has submitted a tender may participate in a following tender as soon as he has confirmed from the tender result (available on HKEx website) that his earlier tender was not successful.
Q15: Can I withdraw my tender for relinquishment of my trading right after the application has been submitted to the Exchange?
A15: Submitted tenders cannot normally be withdrawn.
Q16: Do I have to pay any fees or charges to the Exchange for my relinquishment of a trading right under the tender process?
A16: No fees or charges are payable by the successful tenderer in the tender process. However, the successful tenderer must comply with the rules of the Exchanges for relinquishment of the trading right, including the settlement of all outstanding fees and charges.