| 1. |
Regulation of sponsors and independent financial advisers |
Submissions on the consultation paper were jointly published by HKEx and the Securities and Futures Commission (SFC) on 3 November 2003. The preliminary consultation conclusions were considered by the Listing Committee in December 2003 and are being discussed with the SFC with a view to publishing the results and conclusions in the first quarter of 2004.
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HKEx and the SFC have agreed to proceed with the reforms in two stages. The first stage involves amendments to the Listing Rules (Main Board and GEM) and the introduction of a revised Code of Conduct to clarify HKEx's expectations with regard to due diligence. The second stage involves modification of the SFC licensing regime to create specific requirements for sponsors.
The Listing Committee will consider a draft conclusions report and the proposed rule amendments at its Quarterly Policy Meeting in April.
HKEx and SFC will update the market on progress thereafter.
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| 2. |
Exploration of new financial products and review of existing products |
H-shares Index Options
HKEx is conducting a feasibility study on introducing H-shares Index Options.
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HKEx is preparing for the introduction of H-shares Index Options by mid-2004.
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ETFs
Not included in this issue. |
HKEx has started a review on the trading of ETFs (iShares Taiwan and South Korea) admitted under the Pilot Programme.
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| 3. |
Consultation on reducing board lot size and narrowing minimum spreads |
HKEx is informally discussing trading spreads with market practitioners. The issue will be reviewed in 2004.
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HKEx has completed its informal consultation and is reviewing its preliminary findings.
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| 4. |
Expand range of issuer information available through HKEx |
Not included in this issue.
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Enhancements to the range of issuer information available through HKEx have been identified and will be rolled out progressively in 2004.
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| 5. |
Enhancement of IP (Investor Participant) accounts in the Central Clearing and Settlement System (CCASS) |
A consultation paper on an enhanced IP model will be issued in early 2004. Separately, a list of easy-to-implement enhancements to the IP service has been identified and is under review by management. |
The development work on the easy-to-implement, or quick win, enhancements to the IP service has been started and HKEx plans to introduce them to the market in the third quarter of this year. HKEx will continue its study of a long-term IP account model for the Hong Kong market.
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| 6. |
Scripless market (as recommended in the 1999 report by the Steering Committee on the Enhancement of the Financial Infrastructure) |
The consultation on a proposed operational model for a scripless securities market ended on 23 December 2003. Responses were received from brokers, custodians, the Federation of Share Registrars and other associations which represent banking, law, securities and other sectors. Some market practitioners requested and received permission to submit comments after the deadline. HKEx is reviewing the responses and studying the potential impact of a scripless market, and it will continue its discussions with the SFC and market stakeholders.
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HKEx has completed the review of the responses to the consultation and the study of the potential impact of a scripless market. After taking into account market comments and revisiting different scripless models, HKEx has proposed the adoption of the Issuer Register Model and a phased approach on implementation. Under the proposal, the operational procedures would remain largely unchanged while the CCASS Depository would dematerialise part of its immobilised scrip in the initial phase of dematerialisation and continue to operate on a nominee basis. Future development would be driven by market demand. The SFC, the Federation of Share Registrars, broker associations and CCASS Custodian Participants have indicated to HKEx that the proposed model is acceptable and workable. The project team is preparing the consultation conclusions, which will include the details of the proposal, for release shortly. HKEx will work with both the Federation of Share Registrars and the SFC on an implementation plan for the proposed model.
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| 7. |
Expansion of stock borrowing and lending |
Not included in this issue. |
HKEx is conducting a feasibility study on a conceptual model to provide central stock borrowing and lending facilities to its Participants and other potential users.
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| 8. |
Consolidation of Clearing Houses |
HKEx is studying the risk profile of the cash and derivatives markets and will perform a cost-benefit analysis on various consolidation approaches.
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An internal review of the pros and cons of consolidating the three clearing houses is in progress. |
| 9. |
Network consolidation |
HKEx is exploring the possibility of consolidating the networks of AMS/3 (Third Generation Automatic Order Matching and Execution System), CCASS/3 (Next Generation Central Clearing and Settlement System), HKATS (Hong Kong Futures Automated Trading System), the Market Data Feed and other systems to reduce its costs and Exchange and Clearing House Participants' costs without sacrificing service quality. |
A Request For Proposals was issued and HKEx is evaluating the proposals received. |