Status Report on New Product and Market Development Initiatives (Status as of 16 April 2010)

Corporate

29 Apr 2010

Status Report on New Product and Market Development Initiatives
(Status as of 16 April 2010)

The following initiatives are subject to market support and regulatory approval so they may not be implemented. HKEx will announce further details of these initiatives as they progress.

Initiative

Status on 13 January 2010

Status on 16 April 2010

Consultation on Periodic Financial Reporting

At the policy meeting in November last year, the Listing Committee considered this matter and decided to hold the matter over for further consideration at the next quarterly policy meeting.

HKEx welcomed the Government’s recent consultation paper on statutory backing to disclosure requirements in respect of price-sensitive information. Consideration of periodic financial reporting is now being considered in light of the Government consultation.

Combined Consultation on Proposed Changes to the Listing Rules

Consultation conclusions in respect of the one issue that remains under assessment (public float) are in progress.

Cases are being dealt with on a case by case basis. No separate conclusions are planned at this time.

Review of Chapter 18 of the Listing Rules

A consultation paper on new Listing Rules for mineral and exploration companies was published in September last year and responses have been posted on the HKEx website. The Listing Division is analysing the responses and will publish the consultation conclusions in due course.

HKEx has been discussing some technical issues with market participants. Draft consultation conclusions are scheduled to be considered at the Listing Committee’s April policy meeting.

Consultation on Acceptance of Mainland Accounting and Auditing Standards and Mainland Audit Firms for Mainland Incorporated Companies Listed in Hong Kong

Regulators in the Mainland and Hong Kong are working closely to finalise necessary arrangements for implementation of the proposals. Upon completion of these arrangements, HKEx will publish consultation conclusions in due course.

Work to finalise necessary arrangements for implementation of the proposals is continuing.

Consultation on Proposed Changes to the Requirements for Circulars and Listing Documents of Listed Issuers

Responses have been posted on the HKEx website. Consultation conclusions will be published in due course.

HKEx has been discussing some technical issues with market participants. Draft consultation conclusions are scheduled to be considered at the Listing Committee’s April policy meeting.

Consultation on Proposed Amendments to the Listing Rules on Connected Transactions

Responses have been posted on the HKEx website. Consultation conclusions will be published in due course.

HKEx has been discussing some technical issues with market participants. Draft consultation conclusions are scheduled to be considered at the Listing Committee’s April policy meeting.

Exploration of New Financial Products / Services and Review of Existing Products / Services

Options with Flexible Features
HKEx aims to introduce Flexible Index Options in the first quarter of this year, pending successful completion of system adjustments and readiness of participating Exchange and Clearing Participants.

Volatility Index-related Products
HKEx is working with index companies to develop a volatility index for its securities market based on stock index options prices with a view to provide a benchmark of volatility for the marketplace. Recent developments have included discussions with index companies about the calculation of the proposed index.

The Flexible Index Options facility was introduced on 8 February. HKEx is soliciting feedback from market participants.

HKEx and an index company have solicited comments from market participants regarding the volatility index calculation methodology and are working on adaptations relevant to the Hong Kong market.

T+2 Finality for Stock Exchange Trades and Settlement Instructions

A consultation paper was published on 27 November last year. The deadline for submissions is 26 February.

The consultation closed on 26 February. There were 29 submissions. All responses are now being analysed. The consultation conclusions will be published later this year.

Consultation on a Scripless Securities Market

On 30 December last year, the Scripless Securities Market Working Group, led by the Securities and Futures Commission with HKEx and the Federation of Share Registrars participating, issued a consultation paper on the development of a scripless securities market in Hong Kong.

The consultation closed on 31 March. There were over 40 submissions. Submissions are being reviewed by the Joint Working Group. Consultation conclusions will be issued in due course.

10.

Automation of Stamp Duty Reporting and Payment

HKEx aims to introduce electronic stamp duty reporting and payment in the second half of this year, subject to market readiness and rule amendments. The project is progressing according to plan.

To assist Exchange Participants (EPs) in preparing for the automation, HKEx issued a circular on 12 April to invite them to attend a seminar to be held in the last week of April to explain the automation model to EPs and demonstrate stamp duty report submission via a new web-based electronic communication platform. HKEx aims to introduce electronic stamp duty reporting and payment in the second half of this year, subject to market readiness.

11.

AMS/3 Technical Revamp

Market rehearsals were successfully completed in the fourth quarter of last year for Exchange Participants and information vendors to verify readiness of their systems. Rollout of the revamp is scheduled for the second half of January.

Revamped AMS/3 was successfully rolled out on 18 January to double the system throughput to 3,000 orders per second. Corresponding design enhancements were also implemented for CCASS/3 and MDF for capacity alignment with the revamped AMS/3.

12.

Derivatives Market System Capacity and Technology Upgrade

Not included in this issue.

HKEx is upgrading the capacity and technology of HKATS, DCASS, PRS and their satellite applications, which will further increase the group’s processing capability to cater for business growth and expansion over the next few years.

Initiative		Status on 13 January 2010	Status on 16 April 2010

Note:	AMS/3, the Third Generation Automatic Order Matching and Execution System, is the trading system for the securities market. CCASS/3, the Latest Generation Central Clearing and Settlement System, and the Market Data Feed, or MDF, are the other major market systems supporting the securities market. HKATS, the Hong Kong Futures Automated Trading System, is the trading system for the derivatives market. DCASS, the Derivatives Clearing and Settlement System, and PRS, the Price Reporting System, are the other major market systems for the derivatives market.

	Information is added after the date at the top of the column from time to time.

This report is carried in HKEx’s quarterly publication, Exchange, published on 29 April 2010.

Ends

Updated 29 Apr 2010