2011-04-15-e

8/3/2019 2011-04-15-e

1/542 Exchange April 2011

Initiative Status on 15 January 2011 Status on 15 April 2011

Possible changes to the

requirements for

overseas companies

seeking listings in

Hong Kong

Consultation paper on

Review of the Code on

Corporate Governance

Practices and Associated

Listing Rules

Consultation Paper onProposed Changes to

Requirements for the

Listing of Debt Issues

for Professional Investors

Only

Consultation on the

placing of shares at

initial public offering(IPO) and pre-IPO

investments

Reporting on

environmental and

sustainability issues

Status Report on New Product andMarket Development Initiatives

Initiatives are subject to change and may require broad market support and/or regulatory approval before they

can be implemented. HKEx will announce further details of these initiatives as they progress.

1

2

3

HKEx is current ly rev iewing

all requirements for overseas

companies, including those seeking

secondary listings in Hong Kong

and will consider whether to issue

a consultation paper.

HKEx is analysing more than 100

responses received and plans to

publish consultation conclusions

later this year.

HKEx received six responses, all ofwhich are supportive. HKEx plans to

publish the consultation conclusions

and proposed Rule amendments in

mid-2011.

In progress.

HKEx will organise a series of

training seminars and workshops

between May and July 2011 to

help equip listed companies with

practical tools necessary for ESG

reporting. HKEx will consult the

market on a draft ESG Reporting

Guide after the training seminar

and workshop, which will be based

on the draft Guide.

The listing of Brazils Vale SA is a

pilot which may point to a possible

model for an increased-disclosure

approach to the listing of overseas

companies in appropriate cases.

The consultat ion paper was

published on 17 December 2010

and the deadline for responses is

18 March 2011. HKEx will analyse

respondents comments and

publish its consultation conclusions

in due course.

The consultat ion paper waspublished on 17 December 2010

and the deadline for responses is 18

February 2011. HKEx will analyse

respondents comments and


in due course.

The Exchange has commenced soft

consultations with the market on

the policy matter and will considerwhether to issue a consultation

paper.

HKEx wi l l engage ex te rna l

consultants to organise workshops

for issuers in 2011 on how to

conduct environmental, social and

governance (ESG) reporting. The

workshops will be based on a draft

proposed Guide to Environmental,

Social and Governance Reporting.

4

5

8/3/2019 2011-04-15-e

2/5

43 Exchange April 2011


Joint Consultation

Paper on Proposed

Changes to Property

Valuation Requirements

Update on SPRINTS,

the Structured Products

Integrated Transaction

System

Consultation Paper on

Ex-entitlement Trading

and Shareholder

Approval

Simplification of

prospectuses and

related documents

Study on after-hours

Derivatives Trading

The joint consultation paper was

published on 3 December 2010 and

the deadline for responses is 11

February 2011. HKEx will analyserespondents comments and


in due course.

User acceptance test ing of

SPRINTS is currently underway and

is expected to be completed around

the end of January. Details of user

training and rollout arrangement

will be provided to issuers in due

course. HKEx will continue to work

closely with issuers to achieve

successful implementation of the

new system in the second quarter

of 2011.

The consultat ion paper was

published on 17 December 2010

and the deadline for responses is 28

February 2011. HKEx will analyserespondents comments and


in due course.

Not included in this issue.

HKEx has been conducting a study

and soft consultation with market

participants. Initial feedback was

positive. After-hours derivatives

trading would help improve execution

efciency and trading arrangements.

HKEx plans to publish a consultationpaper to seek market views on the

proposal in the middle of the year.

HKEx is ana lys ing over 50

responses received and plans to

publish consultation conclusions in

due course.

User acceptance test ing of

SPRINTS and the trial test with

issuers were completed in the

first quarter. HKEx conducted

two user training sessions on

29 and 31 March, with around

70 representatives of structured

product issuers participating in the

sessions. HKEx plans to launch the

new system in May this year, subject

to the successful completion of

end-to-end testing with issuers.

HKEx received over 40 responses

with the majority supporting ex-

entitlement trading after shareholder

approval. HKEx plans to publishthe consultation conclusions and

proposed Rule amendments in

mid-2011.

HKEx has completed the simplication

of the formal notice and commenced

soft consultations with the market

on the simplication of the summary

section of prospectuses. HKEx is also

considering making amendments,

among others, to the application

forms and relevant application

sections in the prospectuses.

HKEx is preparing a consultation

paper that is tentatively scheduled

to be published in the middle of this

year.

Status Report on New Product and Market Development Initiatives

8

6

7

10

9

8/3/2019 2011-04-15-e

3/5



Exploration of New

Financial Products/

Services and Review of

Existing Products/Services

T+2 Finality for StockExchange Trades and

Settlement Instructions

Consultation on a

Scripless Securities

Market

11

12

Volatility Index-related Products

HKEx and an index company

have completed the solicitation of

comments from market participantsregarding the adoption of volatility

index methodology required for the

Hong Kong market. Meanwhile,

HKEx is exploring the possibility

of introducing a futures contract

on the volatility index with market

participants and its potential design.

Synthetic Futures

Not included in this issue.

HKEx has issued a detai leddescr ip t ion o f the CCASS

operational workflow under T+2

Finality to Designated Banks

for their preparation for system

enhancements. Implementation is

tentatively scheduled for July 2011,

subject to regulatory approval.

The Scripless Securities Market

Working Group is continuing

discussions on the detai ls of

the proposed operating model.

The discussions will facilitate the

drafting of the new subsidiary

legislation under the Securities and

Futures Ordinance by the SFC for

consultation in the first half of 2011.

The HSI Volatility Index, which is

derived from Hang Seng Index

Options prices, was introduced on21 February 2011. HKEx and Hang

Seng Indexes are working together

to educate the market about

the index and promote public

awareness. HKEx is also assessing

demand for a futures contract on

the HSI Volatility Index.

HKEx announced that synthetic

futures will be introduced in thestock options market on 9 May

2011. Synthetic futures are created

with a standard combination trading

function comprising two option

legs, call and put. Investors can use

synthetic futures to gain or hedge

delta exposures in stock options

portfolios.

HKEx has arranged a series ofbriefing sessions with Designated

Banks and CCASS Participants to

prepare for a market-wide rehearsal

in June to ensure market readiness

before launch.

The Scripless Securities Market

Working Group has completed

discussions on high level details

of the proposed operating model.

This will facilitate the drafting of

new subsidiary legislation under the

SFO by the SFC for consultation

around June this year. The Working

Group is continuing discussions

on the outstanding issues and

technical details to prepare for

implementation.


13

8/3/2019 2011-04-15-e

4/5



Derivatives Market

System Capacity and

Technology Upgrade

Securities Market System

Capacity and Technology

Upgrade (also known as

AMS/3.8 and MDS/3.8)

Free Prices Website

Service to be expanded

and repackaged toBasic Market Prices

Service

14

16

Phase 2, which upgrades the design

of DCASS software, will be rolled out

in mid-2011. Circulars outlining the

changes will be issued to Participantsshortly so they will have sufcient

detail and lead time to prepare.

Testing sessions will be held later for

those Participants using the DCASS

OAPI interface.

HKEx expects the upgrades

to be completed by the end of

2011. Technical specifications

have been posted on the HKEx

website. HKEx arranged seminars

in November 2010 for participants

IT development staff and system

vendors.

HKEx has reviewed the Pilot

Programme for the Free Prices

Website Service and decided toopen up the service beginning 1

April 2011 in the form of a standard

service package offered to all its

licensed real-time data information

vendors.

User acceptance testing of the

DCASS Phase 2 upgrade is currently

underway and implementation is

scheduled in the second half of2011.

The simulation test package was

delivered to participants with Broker

Supplied Systems in February 2011

for their software development and

testing. The development of AMS/3.8

and MDS/3.8 software by HKEx has

been completed and internal testing

is in progress. End-to-end testing

with participants and information

vendors is scheduled to commence

in July 2011.

The Basic Market Prices (BMP)

Service was successfully launched

on 1 April 2011. HKEx startedproviding investors with real-time

basic prices from the securities and

derivatives markets through a wider

range of information vendors which

can then offer the data on interactive

platforms such as websites and

mobile applications. As of early

April, there were 23 websites and

10 mobile applications offering the

BMP Service.


15

8/3/2019 2011-04-15-e

5/5



Introduction of PRS

Plus a new faster

derivatives market

datafeed

Establishment of

Clearing House for

Over-the-counter (OTC)

Derivatives Traded in

Hong Kong

Notes:

AMS/3, the Third Generation Automatic Order Matching and Execution System, is the trading system for the securities market. CCASS/3, theLatest Generation Central Clearing and Settlement System, and the Market Data System, or MDS, are the other major market systems supportingthe securities market. HKATS, the Hong Kong Futures Automated Trading System, is the trading system for the derivatives market. DCASS, theDerivatives Clearing and Settlement System, and PRS, the Price Reporting System, are the other major market systems for the derivatives market.

Information is added after the date at the top of the column from time to time.

HKEx plans to roll out the new

and faster real-time datafeed in

the second quarter of 2011. PRS

Plus will be offered as an optionalongside the current PRS feed.

The content of the datafeed and

message format will be identical

except that PRS Plus will have a

shorter price update interval. HKEx

plans to shorten the price update

interval in HKATS from 1 second

to 0.5 seconds in the first quarter

of 2011, which will effect the same

change to the current PRS feed.

The price update interval of PRSPlus at launch will be 0.1 second,

one-fifth that of the PRS feed.

HKEx has decided to establish a

clearing house by the end of 2012

for derivatives traded in Hong

Kongs OTC market. Interest rate

derivatives and non-deliverable

forwards will be the initial products

handled. HKEx is consideringdifferent operating models and

shareholder structures for the

clearing house, which will be run

independently of HKExs other

clearing houses.

The PRS Plus datafeed was

successfully launched on 11 April

2011. Eighteen IVs have subscribed

to the new datafeed and 18 EPs(mainly market makers) have

obtained the end-user licence for

PRS Plus.

HKEx is devising the detailed

ope ra t i ng mode l and r i sk

management framework and will

start discussions with market

participants in the coming months.

HKEx has issued a Request for

Information inviting IT vendorsto submit responses for an OTC

clearing system solution.


17

18

Documents

2011-04-15-e