| 1. |
Amendments to the Listing Rules to require Main Board issuers to publish short announcements in newspapers instead of full announcements |
HKEx's agreed policy direction is that the Listing Rule requirement for Main Board issuers to publish paid announcements in the newspapers should be abolished when conditions so permit. However, HKEx recognises the need to effect an orderly transition from the current arrangements to the proposed eventual model of regulatory news dissemination without paid announcements. HKEx is currently looking into a number of issues, including operational aspects and the form of the announcement, as well as reviewing for such purpose its policies on suspension and its approach to pre-vetting of documents.
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HKEx proposes to require Main Board issuers to publish a short announcement in newspapers to inform the market of the publication of a full version of the announcement on the HKEx website and the issuer's website. The proposed requirement would be an interim measure to facilitate an orderly transition to a purely web-based news dissemination regime. The proposal is subject to system and operational readiness and the necessary final approvals.
HKEx will announce further details of its proposals in due course.
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| 2. |
Review the composition and structure of the Listing Committees
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HKEx published a consultation paper on 18 February 2005 proposing a new structure for listing decision-making. The consultation paper also sets out draft Listing Rule amendments that would implement the proposed structure. Comments on the consultation proposals are due by 22 April 2005.
Subject to consultation responses and Stock Exchange Board and Securities and Futures Commission (SFC) approval, HKEx aims to implement a revised structure in 2005.
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HKEx is considering the comments made in response to the consultation paper. It anticipates publishing consultation conclusions and final Listing Rule amendments that will implement those conclusions in the second half of this year.
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| 3. |
Review of the Growth Enterprise Market (GEM) |
Not included in this issue. |
HKEx is reviewing GEM, which is now in its sixth year of operation, with a view toward publishing a consultation paper on proposed changes to reflect developments in the financial markets since the first GEM listing in late 1999. HKEx plans to consult market participants informally as part of its review for the preparation of the consultation paper.
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| 4. |
Exploration of new financial products and review of existing products |
Callable Bull/Bear Contracts (CBBCs)
HKEx has submitted the proposed CBBC market model and rule amendments to the SFC for deliberation and approval.
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HKEx is planning to introduce CBBC later this year, subject to SFC
approval. |
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FTSE/Xinhua China 25 Index Futures and Options contracts
HKEx is in discussions with the SFC in relation to the proposed contract specifications and rule amendments for FTSE/Xinhua China 25 Index Futures and Options.
(Note: Following SFC approval, HKEx announced on 21 April 2005 that the new products would be introduced for trading on 23 May 2005.)
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FTSE/Xinhua China 25 Index Futures and Options contracts commenced trading on 23 May. |
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Revamp stock options market
A series of enhancement measures for stock options was implemented, effective from 1 February 2005. The Trading Tariffs of Tier 1 option classes were reduced from $5 to $3 per contract to improve the competitiveness of the product. Two market-makers were recruited to provide continuous quotes in eight option classes to increase the visibility of market prices. Additional choices in strike prices were provided by narrowing the strike intervals by 50 per cent in all expiry months of seven option classes. Marketing
programmes were launched through a joint education programme with Options Trading Exchange Participants, account executive briefings and public seminars.
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Two new stock options, Denway Motors and Esprit options, were introduced on 11 July.
Nine Exchange Participants joined HKEx to launch a six-month joint education programme. There were 44 seminars and Continuous Professional Training, or CPT, courses conducted, and total attendance was approximately 6,000. |
| 5. |
Consultation on the reduction of minimum spreads |
After further consultation, HKEx has decided to modify certain AMS/3 trading parameters (AMS/3, the Third Generation Automatic Order Matching and Execution System, is the trading system for the securities market). A Circular has been issued to Stock Exchange Participants, and Broker Supplied System users have been informed of the system changes. Subject to the approval of the necessary rule changes by the SFC and the successful completion of market rehearsals, reduction of minimum spreads for stocks over $30 and changes in related AMS/3 trading parameters will be implemented around mid-year.
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HKEx reduced minimum trading spreads for shares trading above $30 and changed trading parameters of AMS/3 on 4 July. The date was set after the successful completion of market rehearsals during the weekends of 18 and 25 June. The SFC approved the rule changes required for the reductions. As of 27 June, there were 29 shares priced above $30. |
| 6. |
Review position limits for stock options, Hang Seng Index (HSI) products and H-shares Index products
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HKEx has conducted a review on the respective position limits for stock options, HSI products and H-shares Index products, to see if they are at appropriate levels to accommodate market trading and hedging needs. The results of the survey are being discussed with SFC executives.
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Under discussion with the SFC.
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| 7. |
Scripless market (as recommended in the 1999 report by the Steering Committee on the Enhancement of the Financial Infrastructure)
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The SFC is progressing with the preparation for the public consultation on the draft Bill on the enabling legislation.
HKEx is finalising the business requirements with the Federation of Share Registrars (FSR) on the operational arrangements to support uncertificated shareholdings of the Central Clearing and Settlement System (CCASS).
The FSR has held a few discussion workshops with HKEx to walk through the technical details of the various options being considered for the scripless transfer model and explore how they may be further improved to address the market concerns raised during the consultation on the operational model.
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The SFC is working with the Government to prepare for the public consultation on the draft Bill on the enabling legislation.
HKEx has prepared drafts on the business requirements and interface specifications of the operational arrangements between Hong Kong Securities Clearing Company, or HKSCC, and the share registrars to support uncertificated shareholdings of CCASS. The documents are being reviewed by the FSR.
Further discussions on the various options for the scripless transfer model are held between FSR and HKEx to address the market concerns and to come up with a viable model for the long term scripless securities market operations.
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| 8. |
Network consolidation for major market systems on a new network |
PCCW substantially completed the network design and core network infrastructure construction in the first quarter of 2005 as planned. The SDNet is undergoing a System Integration Test by PCCW to fine-tune the network configurations. That test will be followed by a User Acceptance Test to accept the SDNet between April and July 2005.
Participant circuit installation activities for HKATS/DCASS* Participants and PRS* information vendors have started and the target for completion is the third quarter of 2005. Five briefing sessions were conducted to highlight project information to the HKATS/DCASS Participants and PRS information vendors.
Market Rehearsal Test for HKATS/DCASS/PRS network will be conducted in the third quarter of 2005 and migration of the HKATS/DCASS/PRS network will be implemented in the fourth quarter of 2005.
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User Acceptance Test to accept the SDNet from PCCW is in good progress and will be completed by the end of July 2005.
Participant circuit installation activities for HKATS/DCASS/PRS network will be substantively completed in July 2005.
Market Rehearsal Test for HKATS/DCASS/PRS will be conducted between August and September 2005.
HKATS/DCASS/PRS network will be migrated to the SDNet in the fourth quarter of 2005 as planned.
The rental of Participant circuits for HKATS/DCASS/PRS will be reduced by 20 per cent upon migration to the SDNet.
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| 9. |
Renovation of the Trading Hall
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Following an open invitation for design proposals, three design companies submitted proposals which are now being evaluated. The refurbishment is expected to be conducted and completed in three phases:
- Relocation in the Trading Hall of some Exchange Participants and partial sealing off of the hall for Phase 1 renovation: July 2005
- Completion of the new trading area: December 2005
- Completion of the exhibition area and other contiguous areas: Second quarter of 2006
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The renovation is being conducted and will be completed in three phases:
- Relocation in the Trading Hall of some Exchange Participants and partial sealing off of the hall for Phase 1 renovation: July 2005
- Completion of the new trading area: December 2005
- Completion of the exhibition area and other contiguous areas: Second quarter of 2006
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