Hong Kong Exchanges and Clearing Limited (HKEx) is seeking views from market participants on proposed changes in trading parameters and market-making obligations for Pilot Programme Securities and Exchange Traded Funds, and minimum trading spreads for structured products and equity warrants, following the HKEx Board's recent decision to narrow the minimum trading spreads for securities trading above $30.

HKEx published a consultation paper on the reduction of minimum trading spreads on6 August 2004. The conclusion results and the analysis were considered by the HKEx Board in December last year and the Board decided to proceed with the phase one proposal, under which minimum trading spreads for securities trading above $30 would be narrowed, in the middle of this year. The relevant rule changes will be submitted to the Securities and Futures Commission for approval.

Trading parameters, including quotation rules, and market-making obligations for Pilot Programme Securities and Exchange Traded Funds are tied to minimum trading spreads of securities. There are also structured products (derivative warrants and equity linked instruments) and equity warrants linked with equity securities.

A questionnaire on the proposed changes in trading parameters and other settings was circulated to Stock Exchange Participants today and has also been posted on the HKEx website under the Market Consultation section for market users' reference
http://www.hkex.com.hk/eng/newsconsul/mktconsul/marketconsultation.htm. Market participants can submit their comments to HKEx on or before14 February 2005.

HKEx will inform market participants about the progress of HKEx's plan on the matters as soon as they are available.