| 1. |
Amendments to the Listing Rules to require Main Board issuers to publish short notification announcements in newspapers instead of full announcements |
Not included in this issue.
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HKEx's agreed policy direction is that the Listing Rule requirement for Main Board listed 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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| 2. |
Review the composition and structure of the Listing Committees |
In response to the Government's Consultation on Proposals to Enhance the Regulation of Listing, HKEx plans to consult the market in the first quarter of 2005 on modifications to the composition and structure of the Listing Committees in their administrative decision-making and advisory roles. The proposed changes would provide for a broadening of the membership of the Committees and increased investor participation.
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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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| 3. |
Exploration of new financial products and review of existing products |
Callable Bull/Bear Contracts (CBBCs)
Having carefully considered the comments received from a consultation with structured product issuers, HKEx is now preparing a submission on the CBBC market model to the SFC for deliberation.
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HKEx has submitted the proposed CBBC market model and rule amendments to the SFC for deliberation and approval.
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FTSE/Xinhua China 25 Index Futures contract
HKEx is studying the feasibility of introducing a FTSE/Xinhua China 25 Index Futures contract. Factors being considered include the development of the underlying market, potential market demand and regulatory requirements.
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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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Revamp stock options market
HKEx is recruiting market-makers to provide continuous quotations in the most popular options classes. HKEx will also narrow the strike intervals for selected option classes to offer more choices in strike prices to better suit trading needs. A series of educational activities on stock options will be conducted jointly with Options Trading Exchange Participants to raise public investors' knowledge about this product.
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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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| 4. |
Consultation on the reduction of minimum spreads |
HKEx's Board of Directors has endorsed the proposal to narrow minimum trading spreads for stocks over $30. The proposal is expected to be implemented in the second quarter of 2005.
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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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| 5. |
Review position limits for stock options, Hang Seng Index (HSI) products and H-shares Index products |
Not included in this issue.
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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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| 6. |
Scripless market ( as recommended in the 1999 report by the Steering Committee on the Enhancement of the Financial Infrastructure) |
The SFC is making progress in drafting the enabling legislation.
HKEx has discussed with the Federation of Share Registrars the overall operational arrangements to support uncertificated shareholdings of CCASS, the Central Clearing and Settlement System. The next step will focus on agreeing the details of the operational arrangements.
The Federation of Share Registrars also has had discussions with HKEx on the way forward with the electronic linkage to facilitate the transfer of uncertificated shares on the register of members maintained by the share registrars. Various options for the scripless transfer model are being explored.
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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 on the operational arrangements to support uncertificated shareholdings of CCASS.
The Federation of Share Registrars has held a few discussion workshops with HKEx to walkthrough 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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| 7. |
Network consolidation for major market systems on a new network. |
HKEx has selected PCCW to supply, implement and operate the HKEx consolidated network, SDNet, following an open market competition and thorough tendering and evaluation process. The HKATS/DCASS/PRS* network will be migrated in 2005, followed by CCASS/3 in 2006, and AMS/3 and MDS in 2007.
As a result of the network consolidation, the usage fees of the AMS/3 trading devices were reduced by 20 per cent on 1 January 2005.
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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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| 8. |
Renovation of the Trading Hall |
HKEx invited designers/ architects to submit expressions of interest in the Trading Hall project by mid-December 2004 and is now reviewing the responses. Short-listed candidates will be invited for tender. |
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:
- Transitional move of Exchange Participants to temporary trading booths: 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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