Hong Kong Exchanges and Clearing Limited (HKEx) announced today the introduction of a service for the relinquishment of transferable Trading Rights* for its Stock and Futures Exchanges.
Under the scheme, which will be effective on 7 March 2007, whenever HKEx receives an application for a Trading Right#, it will ask current holders of transferable Trading Rights if they wish to relinquish those Trading Rights. The lowest offer price from a transferable Trading Right holder, subject to the terms and conditions of the process, will be used to price a new Trading Right for the applicant. It will also be the price paid by HKEx for the relinquishment of the transferable Trading Right. HKEx will publish on its website the results of each tender.
If there is no valid offer to relinquish a transferable Trading Right, HKEx will issue a new Trading Right to the applicant at its prevailing fee. The prevailing fee is currently $500,000 and subject to an annual review. There is also an administration fee payable by the applicant. According to the terms and conditions of the service, offer prices from holders of transferable Trading Rights should not be higher than the prevailing fee.
The scheme will not affect the sale and purchase of transferable Trading Rights via direct negotiation, which can continue until 5 March 2010. The current market price for the sale of transferable Trading Rights is about $400,000.
“The service is expected to help some current holders of transferable Trading Rights relinquish excess transferable Trading Rights,” said Gerald Greiner, HKEx’s Chief Operating Officer. “It was designed to meet the needs of applicants, transferable Trading Rights holders and HKEx, which can issue new Trading Rights under the terms of the merger arrangements approved by the Exchanges’ shareholders.”
Further information about the service will be available on 2 March on the HKEx website under the Exchange and Clearing House Participants section (www.hkex.com.hk/eng/market/hkex_part/EPIndex.htm).
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The Stock and Futures Exchanges are wholly-owned subsidiaries of HKEx. Under the merger arrangements approved by the Exchanges’ shareholders in 1999, Trading Rights granted under the HKEx merger scheme are only transferable prior to 6 March 2010 and only one transfer per Trading Right is allowed.
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Under the merger arrangements approved by the shareholders of the Exchanges in 1999, HKEx could issue new Trading Rights, which are not transferable, directly without any price restriction after 6 March 2004 (so far, it has not issued any).
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Overview of Trading Rights for HKEx’s exchanges