The Stock Exchange of Hong Kong Limited (the Exchange) has amended Chapter 20 and its ancillary sections of the Main Board Listing Rules for the purposes of: Creating a listing and trading platform for all collective investment schemes that are authorised by the Securities and Futures Commission (the "SFC"); Clarifying the respective regulatory roles of the SFC and the Exchange in the initial listing of, and the on-going regulatory monitoring of, collective investment schemes; and Streamlining the listing process for authorised collective investment schemes. The rule change will come into effect on 1 September 2003.

The SFC is empowered by the Securities and Futures Ordinance (the SFO) to authorise collective investment schemes (collective investment schemes or CIS) in accordance with the requirements of the respective codes applicable to collective investment schemes issued by the SFC from time to time. Before the SFO came into effect on 1 April 2003, the equivalent authorisation powers of the SFC were derived from the then Securities Ordinance.

To clarify and elaborate the existing rules and practices, the Exchange has amended the Main Board Listing Rules. The principal amendments are set out below:

Chapter 20 applicable to all investment product codes for authorised collective investment schemes

Chapter 20 of the Main Board Listing Rules currently provides a listing avenue only for collective investment schemes authorised by the SFC pursuant to the Code on Unit Trusts and Mutual Funds; accordingly, a listing is not available for collective investment schemes falling within any other code issued by the SFC pursuant to Section 104 of the SFO. Chapter 20 will now be extended to cover all collective investment schemes authorised by the SFC in accordance with the applicable investment product codes issued by the SFC pursuant to the SFO from time to time.

Listing Unit (instead of the Listing Committee) be vested with the power to grant listing approvals

Since the offer structure and offer document of a collective investment scheme would have been vetted by the SFC during its authorisation process, the Exchanges role at the time of listing will be confined to ensuring compliance with procedural aspects of the listing process. Therefore, the function to grant listing approvals will now be discharged by the Listing Unit, instead of the Listing Committee, of the Exchange.

SFC to be primarily responsible for authorisation and monitoring of authorised CISs in accordance with the applicable codes and the Exchange to oversee compliance with the Listing Rules

The SFC is the primary regulator of collective investment schemes, at both the pre- and post-authorisation stages. At the pre-authorisation stage, the SFC is empowered under the various applicable investment product codes to review and approve both the schemes proposed structure, management and operating procedures, and the contents of the schemes constitutive, offering and marketing documents. At the post-authorisation stage, the SFC is responsible for overseeing the continuing compliance of authorised scheme with the relevant codes and guidelines and vetting most announcements and notices that are to be published by the collective investment schemes.

The Exchange will be ensuring that authorised collective investment schemes are listed in accordance with the Listing Rules and the applicable provisions of the Listing Agreement or covenants entered into between the Exchange and the CIS operators or the CIS (as the case may be). Listed collective investment schemes are still subject to the general obligation to disclose price sensitive information and respond to enquiries from the Exchange concerning unusual movements in share price or trading volume.

Requirement for a sponsor

An authorised collective investment scheme listing applicant will no longer require a sponsor. Given the involvement of the SFC in all aspects of the approval of a CIS, the SFC is in a position to impose requirements as to the qualification and behaviour of persons involved in arranging the offering of interests in a CIS. The new rules simply codify the current practice of the Exchange in accepting the administrative nature of the listing related work of the sponsor, which can be carried out by an experienced agent of the CIS.

The rule change will come into effect on 1 September 2003. Reprinted pages of the Listing Rules will be distributed in due course. The rule change is available for viewing on the website of Hong Kong Exchanges and Clearing Limited at http://www.hkex.com.hk.