HONG KONG EXCHANGES AND CLEARING LIMITED
(Incorporated in Hong Kong with limited liability under the Companies Ordinance)
(Stock Code: 388)
FEES REVIEW AND PROPOSED FEE CHANGES
At the meeting held today, the Board approved a review of fees and charges to satisfy a requirement of the SFC, and in addition, approved the Fee Proposals. The Fee Proposals will be submitted to the SFC for its approval under Section 76 of the SFO. The Fee Proposals mainly involve changes in fees of the clearing houses, and will be implemented in stages.
The following is a summary of the proposed phase 1 changes under the Fee Proposals -
| (a) |
to reduce the scrip fee of Hong Kong Securities Clearing Company Limited ("HKSCC") by 40% for all issues upon commencement of dematerialisation of share certificates planned for 2006 subject to the completion of the legislative process and amendments to the Listing Rules and the General Rules of CCASS. The current scrip fee is HK$1.5 per board lot (for collection on book close dates and corporate action effective dates) and HK$0.75 per board lot (for collection on deemed book close dates and dates upon termination of participation in CCASS) on net increases in aggregate holdings of registered securities since the date on which the fee was last collected;
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| (b) |
to increase the minimum Stock Settlement fees for Exchange Trades and Settlement Instructions ("SI") transactions from HK$2.00 to HK$3.00;
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| (c) |
to replace the custody fee, the dividend and debt securities interest collection service fee and the corporate action service fee with a single custody fee at 0.01% per annum of the value of the securities deposited by CCASS Participants into CCASS, with a cap of HK$300,000 per month; and
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| (d) |
to abolish the HK$1 SI input fee. |
The abolition of the remaining 60% of scrip fee will occur in phase 2 of the Fee Proposals, which is planned to take effect alongside with the dematerialisation of issuer certificates in CCASS on a per listed issue basis. A new deposit fee of HK$10.00 per physical certificate deposited into CCASS would also be introduced during phase 2.
Other than the above fee changes, HKEx proposes changes to the following fees and charges as soon as practicable subject to the approval of the SFC of the changes and related amendments to the relevant rules and regulations -
| (a) |
to abolish the interest retention rate of 1.2% for HKFE Clearing Corporation Limited ("HKCC"), and that of 2% for The SEHK Options Clearing House Limited ("SEOCH") on margin deposits, and rebate interest to Participants at the prevailing bank savings deposit rate on their cash margin deposits. However, Participants will be charged the negative interest if the bank savings deposit rate is negative; and
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| (b) |
to reduce the accommodation charges levied by HKCC and SEOCH from 1.2% and 2% respectively to 0.5% on utilised non-cash collateral. |
Based on the level of activities in 2003, and the assumption of full implementation of the Fee Proposals, the overall financial impact of the Fee Proposals on HKEx would be a decrease in revenue of approximately HK$48 million on a yearly basis.
The Board notes that the part of the Fee Proposals relating to HKSCC, which are subject to the approval of the SFC, are based on the enactment in future of legislation to facilitate the dematerialisation of share certificates and the eventual implementation of the scripless project. Assuming the eventual full implementation of the Fee Proposals, the financial impact on HKEx will also be dependent upon many factors, including but not limited to, interest rates, trading and settlement activities, share deposit activity, share custody and related activities, and futures and options markets activities and use of cash versus non-cash collateral.