| 1. |
Regulation of sponsors and independent financial advisers |
HKEx and the Securities and Futures Commission (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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HKEx has received constructive comments from sponsor and financial advisory firms during the May soft consultation process and is now working on revisions to the Listing Rules that will codify its existing expectations including those regarding the due diligence sponsors should be undertaking. HKEx seeks to obtain approval for the new rules in the third quarter and implement them in the fourth quarter of this year.
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| 2. |
Exploration of new financial products and review of existing products |
H-shares Index Options
HKEx is preparing for the introduction of H-shares Index Options by mid-2004.
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HKEx introduced H-shares Index Options on 14 June.
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Exchange Traded Funds (ETFs)
HKEx has started a review on the trading of ETFs (iShares Taiwan and South Korea) admitted under the Pilot Programme.
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The review is ongoing.
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| 3. |
Consultation on reducing board lot size and narrowing minimum spreads |
HKEx has completed its informal consultation and is reviewing its preliminary findings.
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Following discussions with various market participants, HKEx is planning to issue shortly a consultation paper on narrowing the trading spreads. Under consultation will be a proposal to narrow the minimum spreads in phases, the first of which would focus on shares valued above $30. Options will also be proposed for extending the reductions in a second phase.
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| 4. |
Expand range of issuer information available through HKEx |
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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HKEx has expanded the range of issuer information and related services available through the HKEx website. New services include email and SMS (short message service) alerts on Disclosure of Interests filings of specified issuers and the provision of share repurchase reports dating back to 27 November 1991. Additional content has also been added to the Company/Security Profiles in the online Investment Service Centre, including contact details for share registrars and a list of related stocks with hyperlinks to the corresponding information for the related stock.
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| 5. |
Enhancement of IP (Investor Participant) accounts in the Central Clearing and Settlement System (CCASS) |
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 longterm IP account model for the Hong Kong market. |
The development work on the enhanced features of the IP account service has made good progress. HKEx will have a series of promotion programmes to introduce the new features to the market. The programmes will include incentive schemes for existing and new account holders.
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| 6. |
Scripless market (as recommended in the 1999 report by the Steering Committee on the Enhancement of the Financial Infrastructure) |
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. 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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HKEx published its consultation conclusions on 31 May to report respondents' comments and recommend a way forward for the scripless initiative.
Discussion with the SFC and the Federation of Share Registrars on details for implementation of the proposed way forward resumed in late June.
The Financial Services and Treasury Bureau and the SFC are finalising the draft enabling legislation with a view to introducing it to the Legislative Council in the next legislative session, which begins in October. |
| 7. |
Expansion of stock borrowing and lending |
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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The study is in progress.
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