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 HKSCC and HKSCC 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 acts as the nominee of HKSCC and holds the legal title in all securities listed and traded on the 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 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 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 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 HKSCC, 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
The Listing Rules define an “overseas issuer” as one that is incorporated or otherwise established outside Hong Kong and the People’s Republic of China. To list on the Exchange, an overseas issuer must be incorporated either in the Cayman Islands, Bermuda or a jurisdiction that the Exchange has accepted for listing. Please refer to “Listing of Overseas Issuers” on the HKEX website.
Any overseas issuer (except issuers incorporated in the Cayman Islands and Bermuda) seeking to list its securities on the Exchange is required to submit the CCASS Admission Form for New Listing of Shares to HKSCC. The CCASS Admission Form for New Listing of Shares will be used to assess the admission eligibility of the overseas issuer.
A legal opinion is required to be submitted together with the CCASS Admission Form for New Listing of Shares in regard to the recognition of beneficial ownership under the laws of the overseas jurisdiction.
Overseas issuers (except those incorporated in the Cayman Islands and Bermuda) seeking to list depositary receipts in Hong Kong are required to submit the CCASS Admission Form for New Listing for Depositary Receipts to HKSCC.
Application from overseas issuers (listed issuers)
Listed overseas issuers (except those incorporated in the Cayman Islands and Bermuda) proposing to list a new class of shares are also required to submit the CCASS Admission Form for New Listing of Shares to HKSCC.
Listed overseas issuers (except those incorporated in the Cayman Islands and Bermuda) proposing to list a further issuance of shares of a class that is already listed on the Exchange are required to submit the CCASS Admission Form for Listed Issuers proposing to list further issuance of shares of a class that is already listed to HKSCC.
Please note that an overseas issuer applying to be accepted as Eligible Security may be required to make proper public disclosure and/or provide legal opinions to address any 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’s clearing, settlement and custody structure of Hong Kong.
Note: Please refer to our FAQ for 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 a Direct Clearing Participant, General Clearing Participant, Custodian Participant, Stock Lender Participant, Stock Pledgee Participant, Clearing Agency Participant and an Investor Participant as defined in General Rules of HKSCC.
[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.