The Stock Exchange of Hong Kong has received enquiries from Exchange Participants relating to the one-off sale of shares by shareholders who have obtained shares through initial public offerings.

In general, before an Exchange Participant accepts or operates a securities trading account for any investor in relation to securities traded on the Stock Exchange, the Exchange Participant is required to enter into a Client's Agreement with that investor.

This is required under Rule 532 of the Exchange. In addition, the Code of Conduct for Persons Registered with the Securities and Futures Commission (the Code) also outlines requirements regarding the content of Client's Agreement. The Securities and Futures Commission (SFC) has advised that the requirement regarding the content of the Client's Agreement may be modified to reflect the limited service offered in a one-off sale of shares.

An Exchange Participant should generally have regard to all the requirements in C6 of the Code unless the provisions are not applicable to such limited service. In particular, where the service to be provided is limited to a one-off sale of shares, clauses C6.2:

(g) regarding authorisation to pledge client's securities, 
(h) regarding margin or short selling facilities, and 
(i) regarding derivative products, futures contracts or options.

of the Code are not applicable.

In connection with the one-off sale service to be provided to clients, an Exchange Participant is still required to comply with other requirements of the Rules of the Exchange, including Rules 535(1) and 536 in relation to the contract note and Rule 537 in relation to the client identity requirements

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