The extent to which the available quota for a stock has been used is measured by reference to the warrant issues over that stock. With immediate effect, by means of a general modification of Listing Rule 15A.34, the Exchange will measure the extent to which the quota for a stock has been used by reference to the number of warrants over that stock that are held by the public. The current quota limits will remain unchanged and the use of the quota will be measured on a weekly basis.
The Exchange has modified its practice to ensure that it remains relevant in the context of amendments made to the Listing Rules for warrants which came into effect on 10 December 2001 and relevant in the context of current market conditions.
Under the existing Rules, warrant issuers are no longer required to place or sell at least 85 per cent of a derivative warrant issue on launch. Thus the warrant may be listed but held entirely by the issuer. In addition, the issuer may repurchase and resell the warrant throughout its life, resulting in constant fluctuations in the percentage of the issue held by the public.
If the utilisation level increases to 75 per cent monitoring will be on a daily basis. If the utilisation level increases to 90 per cent the Exchange will ask issuers to reduce the utilisation level. To reduce the utilisation level issuers may repurchase derivative warrants issued or suspend the further sale of existing warrants.
The Securities and Futures Commission has granted its consent under Listing Rule 2.04 for the modification of the requirements for derivative warrant issues in the Listing Rules.
A copy of the announcement is attached for reference.
Announcement
The Main Board Listing Rules impose a limit, often referred to as quota, on the number of shares of companies listed on the Exchange that may be subject to derivative warrant issuance.
Currently the extent to which the quota for a particular stock has been utilised is measured by reference to the size of derivative warrant issues over that stock. With immediate effect, the extent to which the quota for a particular stock has been utilised will be measured by reference to the number of derivative warrants over that stock that are held by the public.
The Main Board Listing Rules impose a limit on the number of shares of companies listed on the Exchange that may be subject to derivative warrant issuance. This limit (the lower of 20% of a company's issued shares or 30% of the public float) is often referred to as quota.
The extent to which the available quota for a particular stock has been utilised is measured by reference to the size of derivative warrant issues over that stock. With immediate effect, by means of a general modification of Listing Rule 15A.34, the Exchange will measure the extent to which the quota for a particular stock has been utilised by reference to the number of derivative warrants over that stock that are held by the public. The current quota limits will remain unchanged and the utilisation of quota will be measured on a weekly basis.
If 50% of the quota for a particular stock is utilised (as calculated above) then issues of derivative warrants over that stock will be prohibited until the utilisation level falls to below 45%. If the utilisation level increases to 75% then monitoring will be performed on a daily basis. If the utilisation level increases to 90% the Exchange will ask issuers to take steps to reduce the utilisation level.
The Securities and Futures Commission has granted its consent under Listing Rule 2.04 for the modification of such relevant requirements in the Listing Rules.
Issuance Limits For Derivative Warrants
