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The Stock Exchange of Hong Kong Limited (the Exchange), a wholly owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEx), today (Friday) issued a guidance letter on trading halts in securities of listed issuers. The letter sets out the criteria for and principles of trading halts under the current rules and provides guidance on good practices about trading halts pending disclosures of material information by listed issuers. It also facilitates investors' understanding of the circumstances where trading halts are necessary.
The Exchange noted an increase in the number of trading halts in the first half of this year alongside with an increase in issuers' corporate activities. In the first six months of 2015, there were 522 trading halts (309 for the same period in 2014). In most of these cases, trading was halted because the issuer said that it had a disclosure obligation under Part XIVA of the Securities and Futures Ordinance (eg, agreements on material transactions or fundraising activities) but could not promptly announce the information, or there were circumstances which caused the issuer to believe that confidentiality in respect of inside information (eg, material corporate activities under negotiation) might have been lost. The number of trading halts between July and November went down to 305, same level as 2014.
"Under the rules, trading in securities should be halted only if it is necessary for the protection of investors or the maintenance of an orderly market," said David Graham, HKEx's Chief Regulatory Officer and Head of Listing. "Issuers should use their best efforts to plan their affairs to avoid trading halts. Any trading halt should be kept to a period that is absolutely necessary to ensure investors are not denied reasonable access to the market."
The guidance letter can be found on the HKEx website.
Notes:
| 1. | Reasons for trading halts / suspensions based on issuers' resumption announcements published in the first six months of 2014 and 2015: |
|
Reasons for trading halts / suspensions |
Number and % of total |
Change |
|||
|
|
Jan - Jun 2015 |
Jan – Jun 2014 |
|
||
|
Pending announcement of inside information |
|
|
|
|
|
|
132 |
27% |
51 |
17% |
+159% |
|
87 |
17% |
79 |
27% |
+10% |
|
43 |
8% |
25 |
8% |
+72% |
|
123 |
25% |
54 |
19% |
+128% |
|
97 |
20% |
66 |
22% |
+47% |
|
|
|
|
|
|
|
|
Other rule-prescribed suspensions: |
|
|
|
|
|
|
3 |
1% |
5 |
2% |
-40% |
|
8 |
2% |
12 |
4% |
-33% |
|
|
493 |
100% |
292 |
100% |
+69% |
| # | Issuers announced 1,572 equity fundraisings, notifiable transactions and takeovers between January and June 2015 (1,094 for the same period in 2014). |
| * | Includes material business updates or events, profit warnings, changes of shareholding, etc. |
| 2. | Duration of trading halts / suspensions in above cases: |
|
Reasons for trading halts / suspensions |
Suspension period (trade days) |
|||
|
|
Jan-Jun 2015 |
Jan-Jun 2014 |
||
|
|
Median |
% of cases |
Median |
% of cases |
|
Pending announcement of inside information |
|
|
|
|
|
2 |
27% |
1 |
17% |
|
3 |
17% |
2 |
27% |
|
4 |
8% |
3 |
8% |
|
1 |
25% |
1 |
19% |
|
1 |
20% |
1 |
22% |
|
|
|
|
|
|
|
Other rule-prescribed suspensions: |
|
|
|
|
|
39 |
1% |
51 |
2% |
|
4 |
2% |
1 |
4% |
|
|
|
|
|
|
|
Overall |
1 |
100% |
1 |
100% |
| * | Includes material business updates or events, profit warnings, changes of shareholding, etc. |
