Hong Kong Exchanges and Clearing Limited (HKEx) has developed a new market structure for Exchange Traded Funds (ETF). ETF are open-ended mutual funds or unit trusts, listed or traded on stock exchanges. Investors can buy or sell them like ordinary stocks through their brokers during trading hours.

Under the new structure, ETF can be listed on the Stock Exchange or listed elsewhere and admitted to the Stock Exchange under a "trading only" arrangement. Automatching on the Automatic Order Matching and Execution System (AMS/3) can be supported by market making.

"Exchange Traded Funds, particularly index trackers and sector baskets, have become popular in some markets. This is a global trend and so we have developed a new market structure that enables ETF sponsors to introduce a wide range of products in our market," said Lawrence Fok, Deputy Chief Operating Officer of HKEx. "The end result will be more choices for investors."

The first two ETF, iShares MSCI Taiwan Index Fund and iShares MSCI South Korea Index Fund, are based on MSCI indices that represent investment opportunities in Taiwanese and Korean companies available to investors world-wide. It is intended that trading of these two ETF will commence on 2 May. They will be traded in US dollars on AMS/3 continuously between 10 a.m. to 4 p.m. Brokerage commissions will be negotiable, transaction costs will be comparable to share trading and there will be no stamp duty. Settlement will be T+2, also the same as stocks, and settlement will be scripless.

iShares MSCI Taiwan Index Fund and iShares MSCI South Korea Index Fund will be introduced under a "trading only" arrangement.

Real-time data on the underlying indices for the two iShares will be available through the Stock Exchanges trading system, Bloomberg and Reuters. In addition, end-of-the-day data on the two indices will be available in the daily quotations on the HKEx website (http://www.hkex.com.hk). The data will also be distributed to the news media.

Barclays Global Investors, the investment arm of UK-based Barclays PLC, is the sponsor and fund advisor for iShares MSCI Taiwan Index Fund and iShares MSCI South Korea Index Fund. JPMorgan is the custodian. The two funds are not authorised by the Hong Kong Securities and Futures Commission.

Additional information on ETF is available on the HKEx website and at http://www.ishares.com.