| 1. |
Regulation of sponsors and independent financial advisers (IFAs) |
HKEx 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 is seeking to obtain approval for the new rules in the third quarter of this year and to implement them in the fourth quarter of this year.
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HKEx plans to publish this month a joint HKEx/Securities and Futures Commission (SFC) consultation conclusions report regarding the regulation of sponsors and IFAs, as well as amendments to the Listing Rules (Main Board and Growth Enterprise Market). The rule amendments will implement many of the conclusions; most significantly, they will codify HKEx's current expectations concerning the role sponsors should be performing including the due diligence sponsors would typically perform in relation to initial listing applications.
The final report and rule amendments were approved by the SFC on 20 September this year. The rule amendments will commence on 1 January 2005. They are subject to limited transitional arrangements.*
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| 2. |
Exploration of new financial products and review of existing products |
Exchange Traded Funds (ETFs)
The review is ongoing.
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A new ETF, the Hang Seng Index ETF (stock code: 2833), was listed on the Stock Exchange on
21 September this year.
HKEx is reviewing the eligibility criteria for ETF market-making.
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Callable Bull/Bear Contracts (CBBCs) Not included in this issue.
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HKEx is contemplating the introduction of CBBCs as a new category of Structured Product to give issuers and brokers an opportunity to explore the market potential of CBBCs.
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| 3. |
Consultation on reducing board lot size and narrowing minimum spreads |
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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HKEx published its consultation paper on 6 August this year to invite market views and comments. The consultation period ended on 6 October this year. HKEx is now reviewing the responses it received from market participants and will publish the consultation results in due course.
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| 4. |
Enhancement of IP (Investor Participant) accounts in the Central Clearing and Settlement System (CCASS) |
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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HKEx introduced enhanced features of the IP accounts in CCASS and rewards programme for new and existing account holders on 23 August this year. |
| 5. |
Scripless market (as recommended in the 1999 report by the Steering Committee on the Enhancement of the Financial Infrastructure) |
HKEx published its consultation conclusions on 31 May this year 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 this year.
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 this year. |
The drafting of the enabling legislation is in progress.
To prepare for the initial phase of the scripless implementation, which is the dematerialisation of CCASS holdings, HKEx is working with the Federation of Share Registrars on the operational arrangements between CCASS and share registrars upon CCASS dematerialisation.
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