New York, NY — The National Association of Securities Dealers, Inc. (NASD®) — parent organization of The Nasdaq Stock Market, Inc., and The Stock Exchange of Hong Kong (SEHK) today signed regulatory agreements to transfer mutually useful and necessary regulatory information as part of a pilot program to provide for listings on the Exchange by companies listed on Nasdaq.
NASD Chairman and Chief Executive Officer Frank G. Zarb and Nasdaq International President and Chief Operating Officer John Wall represented NASD and SEHK Chairman H.C. Lee and SEHK Chief Executive Officer Alec Tsui represented the SEHK at the signing ceremony.
“Today we are strengthening the links between two important global financial centers,” said Zarb. “The agreement that we have signed with the Stock Exchange of Hong Kong takes us a major step closer to fulfilling the need for global capital formation and liquidity requirements and to provide worldwide, instant price discovery and trade execution in a fair, orderly, low-cost and well-regulated environment, without time-zone limitations.”
“In the year since our original announcement, our two markets have developed a strong working relationship,” said Wall. “A tremendous amount of work has been done in setting up accounts at the National Clearing Corporation and the Hong Kong Clearing Company. These accounts will provide for a simple mechanism for clearing and settlement to facilitate clearance of cross-border investment.”
Commented H.C. Lee, “The pilot program will allow selected Nasdaq listed companies to acquire listings in Hong Kong by way of introduction. The first listings are expected to take place around February 2000. Market globalization promotes the listing of global corporations with international business on exchanges linking the US, Asian and European time zones. Investors will have easier access to these stocks in any of these markets which will increase the liquidity of the shares. The pilot program will establish Hong Kong as a major trading center for global stocks in the Asian time zone. Eventually Hong Kong will be an integral part of a 24-hour trading platform linking the three main time zones.”
The listings will be under the existing regulatory framework and restricted to issuers with a primary listing on Nasdaq and with a good track record and a large market capitalization. The SEHK's listing rules will not apply to these issuers, who will commit themselves to comply with all Nasdaq requirements. Trading will take place on existing Automatic Order Matching and Execution System and will be in Hong Kong currency.
This is a pilot program to begin the co-listing of Nasdaq and SEHK stocks on each other’s markets. Initially there are expected to be seven stocks to be co-listed, all coming from Nasdaq to be also listed on SEHK, to be followed later by a number of international SEHK stocks. As investors show and gain experience in trading stocks in this way, it is expected that the number of co-listings will increase. The initial list of stocks is as follows:
- Microsoft
- Intel
- Cisco
- Dell
- Amgen
- Applied Materials
- Starbucks
"Surveillance and market supervision will be the same as for the existing trading market and the SEHK's Trading Rules will apply," said Mr. Tsui. "The SEHK will disseminate the closing prices and trading volume in the US as trading information and news. However, the previous closing prices in Hong Kong will not be displayed as the closing prices for the securities in the US will provide a better reference.”
The SEHK is in close discussion with the Securities and Futures Commission of Hong Kong regarding waivers of Hong Kong provisions that are already governed by the US rules and regulations. These will include the Securities (Disclosure of Interests) Ordinance and the Takeover and Share Repurchase Code.
It is expected that the market manipulation provisions of the Securities Ordinance and provisions of the Securities (Insider Dealing) Ordinance that apply to Hong Kong investors will apply to all investors in Nasdaq securities listed in Hong Kong.
"NASD will alert the Exchange to all Securities Exchange Commission and NASD filings by the issuers. Liquidity in securities listed under the pilot program will be provided by market makers who will follow rules adapted from those for the traded options market," Mr. Tsui said.
A joint Web site for investors announced by the two markets on December 17, 1998, that provides share price information on SEHK companies and U.S. companies was the first such cooperative operation of its type by major securities markets. Found at www.porttracker.nasdaq-sehk.com, the Web site has proven to be a major success.
The Stock Exchange of Hong Kong is the second largest exchange in Asia. It is a leading international capital formation and securities trading center for Hong Kong and China, and is one of the most open markets in the world. For more information about the SEHK, please visit the following Web sites : www.sehk.com.hk and www.hkgem.com.
The National Association of Securities Dealers, Inc., is the largest securities-industry, self-regulatory organization in the United States. It is the parent organization of The Nasdaq Stock Market, The American Stock Exchange, and NASD Regulation, Inc. For more information about the NASD and its subsidiaries, please visit the following Web sites: www.nasd.com;www.nasdaq.com; www.amex.com; www.nasdr.com; or the Nasdaq NewsroomSM at www.nasdaqnews.com.
Corporate Communications Department