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Announcement - Amendments to the Main Board Listing Rules Structured Products

Regulatory
19 Jun 2002

ANNOUNCEMENT

AMENDMENTS TO THE MAIN BOARD LISTING RULES
STRUCTURED PRODUCTS


The Exchange has amended the Main Board Listing Rules (the "Listing Rules"). These changes will allow a wider range of derivative products (including derivative warrants and Equity Linked Instruments) to be listed on the Exchange.

The rule changes come into effect on 1 July 2002 and will be available on the web site of Hong Kong Exchanges and Clearing Limited at http://www.hkex.com.hk.

The Exchange has amended Chapter 15A, part D of Appendix 1, part H of Appendix 7 and Appendix 8 to the Listing Rules and has repealed Appendix 6A and Practice Note 14 to the Listing Rules. These previously dealt solely with the listing of derivative warrants on the Exchange. The scope of these chapters and appendices has been widened to deal with the listing of structured products.

Characteristics of the structured products that may be listed on the Exchange include:

  • The underlying asset may be a security, currency, commodity or other asset or combination of assets.

  • They may allow investors to purchase or sell the underlying asset at a predetermined price; or to receive a cash payment (or payments) calculated by reference to the price or value of the underlying asset.

  • The cash payment above may be determined by reference to the value of the underlying asset at a point in time or various points in time.

  • They may require investors to make one or more payments during the life of the product to acquire the underlying asset.

  • They may provide for investors to receive dividends or other distributions on the underlying asset during the product life.

  • They may be European style, American style or other style permitted by the Exchange.

  • They may be collateralised or non-collateralised.

  • They may or may not be capital protected.

The types of structured product that may be listed on the Exchange include derivative warrants and Equity Linked Instruments ("ELI"). A number of specific provisions have been included for ELI:

  • They must be issued in scripless form.

  • The minimum and maximum periods to maturity are 28 calendar days and two years respectively.

  • Lower fees have been introduced for ELI.

Other changes introduced include:

  • Structured Product Issuers will be required to publish announcements on the web site of Hong Kong Exchanges and Clearing Limited.

  • The limit on the number of shares of a company listed on the Exchange that may be the subject of derivative warrant issuance, often called "quota", has been abolished.

  • Structured products, except ELI, may have a life to maturity of up to five years.

  • Greater flexibility has been provided in exercise ratios.

  • Structured Products may be issued in scripless form.

  • The Exchange will publish from time-to-time a list of stocks listed on the Exchange which are suitable for structured product issuance.

  • The listing application procedures for structured products have been streamlined.

The new requirements will come into effect on 1 July 2002 and will be available on the web site of Hong Kong Exchanges and Clearing Limited at http://www.hkex.com.hk

Updated 19 Jun 2002