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ANNOUNCEMENT -- Derivative Warrants issued over commodities

Regulatory
10 Mar 2003

THE STOCK EXCHANGE OF HONG KONG LIMITED
(A wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited)

ANNOUNCEMENT

DERIVATIVE WARRANTS ISSUED OVER COMMODITIES


In the case of derivative warrants issued over commodities, the Stock Exchange of Hong Kong (the Exchange) will consider applications to allow the period between the listing of the warrant issue to its expiry to be no less than one month.

Commodities are generally traded on futures markets under agreed contract specifications that deal with such matters as earliest and latest delivery dates, grades of commodity and location of delivery. There are typically contracts for delivery in each of the succeeding twelve months and for other months beyond this.

The spot price for a commodity is generally taken as being the price for the nearest month's futures contract. Thus, in March the spot price for a commodity may be represented by the price of the April futures contract on that commodity.

Listing Rule 15A.38(1) requires the period between the listing of a derivative warrant to its expiry to be no less than six months. In order to comply with that requirement for warrants issued over commodities it would be necessary to issue the derivative warrant over a contract that expires at least six months after the listing date.

Prices for far months' futures contracts may not be very closely correlated with spot prices. Where this is the case, the Exchange will consider granting waivers from Listing Rule 15A.38(1) to allow derivative warrants to be issued over nearer months' futures contracts. The minimum period between the listing of such a derivative warrant and its expiry shall be no less than one month.

Issuers wishing to apply for such waivers should contact the Listing Division. All such waiver requests will be considered on a case by case basis.

Updated 10 Mar 2003