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Securities Admission into CCASS

Introduction

Hong Kong Securities Clearing Company Limited (“HKSCC”) is a recognised clearing house under the Securities and Futures Ordinance. It operates the central clearing and settlement system (“CCASS”) which provides CCASS services to participants of CCASS subject to its General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

CCASS Shareholding Structure and Operational Features

(i) Shareholding Structure

Under HKSCC’s existing clearing, settlement and custody model, account structures and operations infrastructure, HKSCC Nominees Limited is the nominee of HKSCC and holds the legal title in all securities listed and traded on the Stock Exchange as a registered shareholder on record for participants1 in CCASS (“Participants”).

Participants hold the beneficial interest in such securities for themselves, or as agents (except for Investor Participants2), for their clients in their CCASS stock accounts opened with HKSCC. When a sale or purchase transaction is made on the Stock Exchange, a transfer of beneficial interest in such securities is effected by way of book entry transfers across the CCASS stock accounts of the relevant Participants. Under this model, Participants acquire proprietary rights in respect of the securities for themselves or as an agent for their clients who are the underlying investors, and can create security interests over such securities freely.

 

(ii) Operational Features

Your attention should also be drawn to the other major operational requirements that an issuer has to comply with in order for its security to be admitted into CCASS as Eligible Security.  For details regarding operational features, please refer to Question 9 of the FAQs

 

Criteria for Admission

At present, securities admitted for clearing and settlement in CCASS are securities listed and/or admitted to trading on the Stock Exchange, which include ordinary shares, preference shares, depositary receipts, registered warrants, provisional allotment letters relating to nil-paid rights, debt securities, Exchange Fund Notes, Government Bonds, Specified Instruments, CMU instruments, Foreign Securities, China Connect Securities, ETFs, REITs, structured products and any other types of securities to be listed or traded on the Stock Exchange.

 

Issuers and their agents should refer to the requirements set out in Chapter 5 “Eligible Securities and Eligible Currencies” of the General Rules of CCASS, for general admission criteria. The issuer has the responsibility to provide evidence that the securities satisfy the CCASS admission criteria.

 

Criteria for Admission of Equity Securities

Under the Listing Rules, all new equity securities to be listed are required to be admitted to CCASS as “Eligible Securities” on or before their first listing or trading date.  We set forth below the relevant admission criteria.

When considering the eligibility of a security for admission to CCASS, HKSCC takes into account various factors, including the type of security, applicable legal, regulatory, taxation and operational details of the relevant jurisdictions that may have impacts to investors in Hong Kong and how these securities can be cleared, settled and custodised in Hong Kong through HKSCC. For example, to be admitted into CCASS, the security must be freely transferable or deliverable. HKSCC shall have absolute discretion to determine whether or not an issue of securities shall be eligible or remain eligible for deposit, clearance and settlement in CCASS and be accepted as an Eligible Security. Issuers or their agents should also refer to the Guide to Eligibility and Admission of Securities to the Central Clearing and Settlement System (CCASS) for more details for the eligibility conditions and the procedures and documentations required to be submitted.

 

Application from overseas issuers (new listing applicants)

The Listing Rules define an “overseas issuer” as one that is incorporated or otherwise established outside Hong Kong. To list on the Exchange, an overseas issuer must be either (i) incorporated in a Recognised Jurisdiction, namely Hong Kong; the People’s Republic of China, the Cayman Islands or Bermuda; or (ii) in a jurisdiction that the Exchange has accepted as a place of incorporation ("Acceptable Jurisdiction"). Please refer to “Listing of Overseas Companies” on the HKEX website.

 

(i) Application from overseas issuers in a new jurisdiction

An overseas issuer incorporated in an overseas jurisdiction other than the Recognised Jurisdictions or Acceptable Jurisdictions seeking to list its securities on the Stock Exchange is required to make an application for acceptance as a new jurisdiction.  Please refer to “Joint Policy Statement Regarding Listing of Overseas Companies”.  An overseas issuer is also required to submit the CCASS Admission Form for New Jurisdiction upon application for acceptance as a new jurisdiction3. The CCASS Admission Form aims to collect relevant information that would be used to assess the admission eligibility of the overseas issuers.

A legal opinion is required to be submitted together with the CCASS Admission Form for New Jurisdiction with regards to the recognition of beneficial ownership under the laws of the overseas jurisdiction.

 

(ii) Application from overseas issuers in an Acceptable Jurisdiction

An overseas issuer incorporated in an Acceptable Jurisdiction is required to submit the CCASS Admission Form for New Listing upon application for listing. 

Issuers from Acceptable Jurisdictions seeking to list depositary receipts in Hong Kong is required to submit CCASS Admission Form for New Listing for Depositary Receipts.

 

Application from overseas issuers (listed issuers)

Listed issuers proposing to list a new class of shares is also required to submit the CCASS Admission Form for New Listing to HKSCC.

Listed issuers proposing to list further issuance of shares of a class that is already listed is required to submit CCASS Admission Form for Listed Issuers proposing to list further issuance of shares of a class that is already listed.

 

Please note that overseas issuer seeking application to be accepted as Eligible Security may be required to make proper public disclosure and/or provide legal opinions to address concerns that HKSCC may have relating to any issues associated with the laws under which the issuer is incorporated and/or the laws governing the securities or applicable to the issuer.

An issuer and its agents have the responsibility to identify any other potential legal, regulatory or operational areas which are applicable to the relevant jurisdictions and may have impact to investors’ interests in Hong Kong under CCASS’ clearing, settlement and custody structure of Hong Kong.

 

 

Note: Please refer to our FAQ in relation to some common queries on CCASS services, shareholding structure and admission criteria. You may also contact HKSCC at HKSCC_SA@HKEX.COM.HK for further information.



[1]     Participant means a person admitted for the time being by HKSCC as a participant of CCASS, including Direct Clearing Participant, General Clearing Participant, Custodian Participant, Stock Lender Participant, Stock Pledgee Participant, Clearing Agency Participant and Investor Participant as defined in General Rules of CCASS .

[2]     According to the “Terms and Conditions for Investor Participants”, all securities held in an Investor Participant's account are deemed to be beneficially owned by the Investor Participant for its own account and not as agent or trustee for any other person.

[3]     The applicant can only submit its listing application after the Exchange has accepted such jurisdiction and published the relevant Country Guide. 


 


Updated 29 Oct 2019

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