Hong Kong Exchanges Announces Q3 Results

Listing

Shortening the Deadlines for Half-Year and Annual Reporting by Main Board Issuers On 18 July 2008, The Stock Exchange of Hong Kong Limited published its Consultation Conclusion on Shortening the Deadlines for Half-Year and Annual Reporting by Main Board Issuers. Amendments have been made to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited to accelerate the deadlines for the release of half-year results announcements and annual results announcements, covering accounting periods ending on or after 30 June 2010 and 31 December 2010 respectively.

Web Proof Information Pack (“WPIP”)

The Exchange and the Securities and Futures Commission are in the advanced stages of finalising the joint review of the pilot scheme launched on 1 January 2008 for posting a WPIP on the HKEx website prior to the issue of an initial public offering prospectus with a view to codifying the requirement to post a WPIP in the Main Board Listing Rules and the Rules Governing the Listing of Securities on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited by early 2009.

Introduction of Depositary Receipt Framework in Hong Kong

Following the launch of the Hong Kong Depositary Receipt framework on 1 July 2008, the Exchange is in continued dialogue with market practitioners to understand the needs of the market and to provide practical guidance on operations to facilitate the listing of HDRs.

Reduction in Hard Copies of Issuer Documents

On 1 August 2008, SEHK announced the amendments to the Listing Rules to reduce the number of hard copies of documents that issuers are required to provide to the Exchange effective 1 September 2008. The rule amendments form part of the Exchange’s initiative to enhance its corporate, social and environmental responsibilities.

2008 Combined Consultation Paper

The Exchange has finalised rule amendments for 15 of the 18 substantive policy and corporate governance issues included in the CCP published on 11 January 2008 and obtained the SFC’s approval for most of these rule amendments. The Exchange plans to publish the consultation conclusions in respect of these issues in December 2008. The minor rule amendments set out in the CCP however, have become effective from 1 September 2008.

Joint Consultation Paper on Issue of Paper Application Forms with Electronic Prospectuses The Exchange is analysing the 13 responses to the consultation conducted jointly by the SEHK and the SFC on the proposal to allow distribution of paper application forms for public offers at receiving banks without accompanying hard-copy prospectuses on the condition that electronic prospectuses are available online and other investor protection requirements are satisfied. The consultation conclusions are planned to be published in the second quarter of 2009.

Cash Market

Market Performance

In the first nine months of 2008, 36 companies were newly listed on the Main Board (including 12 that were transferred from the Growth Enterprise Market) and two on GEM. Meanwhile, six Main Board companies and two GEM companies (excluding the 12 transfers) were delisted. Total capital raised, including post-listing funds, reached $182.2 billion. As at 30 September 2008, 1,078 and 181 companies were listed on the Main Board and GEM respectively with a total market capitalisation of about $12,548.3 billion. In addition, there were 3,941 Derivative Warrants, 759 Callable Bull/Bear Contracts, seven Real Estate Investment Trusts, 24 Exchange Traded Funds and 174 debt securities listed as at 30 September 2008. The average daily turnover in the first nine months of 2008 was about $79 billion on the Main Board and about $262 million on GEM.

Listing of Gold ETF

With the listing of the first gold ETF, SPDR Gold Trust, on the Stock Exchange on 31 July 2008, investors are provided with an additional channel to access the international gold market. Up to 30 September 2008, the average daily turnover of the SPDR Gold Trust was about $34 million.

Review of Opening and Closing Auction Mechanism in the Securities Market

The Board has approved the draft consultation paper on Review of Opening and Closing Auction Mechanism in the Securities Market, which includes a number of possible enhancements such as introducing random closing, allowing liquidity providers and securities market makers to participate in the auction sessions, enhancing the trade matching algorithm and applying control measures in the form of auction order price entry limits. The timing of publication will be kept in view until such time when the global market environment becomes more stable.

Short-Selling Restrictions

HKEx and the SFC are of the view that the current environment is not conducive to introducing any changes to the short-selling regime, such as the suspension of the tick rule and other short-selling restrictions.

Revision of Dealing Desk Monthly User Fee and Media Booth Licence Fee

In light of the rental increase upon renewal of the lease of the Trading and Exhibition Halls until 31 October 2011, the user fee for a dealing desk and the licence fee for a media booth in the Trading Hall will be revised to $6,500 per month effective 16 January 2009, and $90,000 per quarter effective November 2008 respectively.

Derivatives Market

Market Performance

In the first nine months of 2008, there were 78,620,535 options and futures contracts traded compared to 61,098,296 in the same period in 2007. In the third quarter of 2008, the total turnover of options and futures recorded a 15 per cent increase over that of the second quarter, to 27,002,646 contracts. The Hang Seng Index futures achieved record daily turnover of 205,119 contracts on 26 August 2008.

Market Maker Obligations Revisions

Effective 2 July 2008, stock options market makers are required to respond to at least 200 quote requests per minute (compared to the previous requirement of at least 50 quote requests per minute), and to provide price quotes for 30 or more contracts on stock option classes under Liquidity Level 1, and 15 or more contracts on classes under Liquidity Level 2 (compared to the previous minimum of 60 contracts under Liquidity Level 1, and 30 under Liquidity Level 2).

Reduction in Transaction Levies for Mini Contract

On 11 July 2008, the SFC announced the reduction of the Commission Levy and Investor Compensation Levy for trading Mini Hang Seng China Enterprises Index futures contracts from $0.80 and $0.50 to $0.16 and $0.10 respectively, which are both one-fifth of the respective levies for the standard H-shares Index futures contracts. Corresponding amendments which took effect on 22 July 2008 were made to the Rules, Regulations and Procedures of the Futures Exchange.

Launch of Gold Futures

The SFC has approved our offer of Futures Exchange Trading Rights to members of the Chinese Gold & Silver Exchange Society or its designated affiliates to trade Hong Kong Futures Exchange Limited products, including the gold futures contracts which commenced trading on 20 October 2008.

Clearing

The Central Clearing and Settlement System Participants to Receive Settlement Monies for Continuous Net Settlement Transactions in Good Funds on T+2

Settlement Day

Effective 27 October 2008, CCASS Participants are provided with the option of receiving from the Hong Kong Securities Clearing Company Limited settlement monies for CNS transactions in good funds through the current intraday payment facility in the afternoon of T+2. This option helps eliminate Exchange Participants’ overnight credit risk and improve the funding liquidity of the securities market at large.

HKSCC makes use of the cash prepayment monies received from CCASS Participants on T+2 to settle its money obligations to CCASS Participants by referring to their settled outstanding positions after completion of the third batch settlement run at around 2:30pm on T+2. If the cash prepayment monies received by HKSCC are insufficient to meet its money settlement obligations in full to all CCASS Participants, the relevant payments will be made on a pro-rata basis, and the outstanding balances will be settled under normal CCASS money settlement for CNS transactions through the overnight batch processing run of the Hong Kong Interbank Clearing Limited whereby CCASS Participants can only receive settlement monies for CNS transactions in good funds in the morning of T+3. -- www.hkex.com.hk