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HKEx Announces New Measures To Facilitate The Listing Of A Wider Range Of Market Access Products

Date 20/12/2007

The Stock Exchange of Hong Limited (Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEx) today (Thursday) announced measures to facilitate the listing of a wider range of Market Access Products (MAPs) as a means to further encourage financial innovation.

Generally, MAPs are structured products with the following underlying assets:

  1. a security listed on an overseas exchange
  2. a commodity asset or a derivative contract
  3. an index based on (1) and (2)

To facilitate the listing of a wider range of MAPs the Exchange has enhanced the structured products’ regime as set out below.

Recognised Exchanges

Structured products may only be issued over an overseas-listed security (or index based thereon) if the security is listed on an exchange that has been recognised for this purpose. Following a review, the Exchange has now expanded the list of recognised exchanges to include all members of the World Federation of Exchanges (WFE) and certain other exchanges. A list of the 66 exchanges now recognised is set out in Appendix I. Other exchanges will be considered for recognition on a case by case basis on request from issuers. Contracts listed on reputable commodity and derivative exchanges and foreign currencies have always been eligible for structured product issuance and will continue to be so.

Maturity

Structured products are not required to be collateralised. To protect investors against an adverse change in the credit standing of an issuer between the issuance and maturity of a structured product, structured products are subject to a maximum life of five years.

The Exchange understands that investors in MAPs may seek a longer term exposure than the current five-year limit would permit. The Exchange considers that it would be appropriate to provide a mechanism to support the listing of longer dated MAP, provided that such mechanism does not compromise the credit protection afforded to investors by the current requirement.

One such mechanism to facilitate this by a modification of general application of the Listing Rules is the rollover approach. The Exchange has received consent for such a waiver from the Securities and Futures Commission. The principal feature of the rollover approach is that at five yearly intervals from launch until the final maturity date there is an assessment of whether the issuer meets the then extant eligibility criteria for structured product issuance. If on any of those occasions the issuer does not meet those criteria the structured product will expire and investors will be paid out in accordance with a pre-determined settlement formula. Issuers should contact the Exchange for further details of the rollover approach.

Richard Williams, HKEx’s Head of Listing commented: “HKEx has taken these steps to facilitate the further development of the structured product market in Hong Kong. The rollover approach facilitates the listing of longer dated structured products whilst maintaining the very high credit standing requirements that form a core element of the eligibility requirements for listing structured products.”

Eric Yip, Head of Cash Market added: “These changes will allow issuers to provide investors with long term exposures to a wide range of underlying assets including single market, regional, thematic, proprietary and Islamic indices, emerging market securities, commodities such as precious metals, natural resources and emission credits, financial derivatives such as interest rate and currency futures, and many more. We look forward to working closely with issuers on the listing of structured products that could further expand the diversity of the Hong Kong securities market.”

Appendix I

Overseas Exchanges Recognised for the Purposes of Issuing Structured Products
(In alphabetical order)

 

1. 

American Stock Exchange

2.     

Athens

3.   

Australia

4.   

Bahrain

5.   

Bermuda Stock Exchange

6.       

BME ( Madrid )

7.   

Borsa Italiana

8.     

Budapest

9.    

Buenos Aires

10.    

Cairo and Alexandria

11.    

Colombia

12.   

Columbo

13.   

Cyprus

14.    

Deutsche Borse

15.   

Euronext ( Brussels , Paris, Amsterdam and Portugal )

16.   

International Securities Exchange

17.   

Irish

18. 

Istanbul

19. 

Jakarta

20.   

Jasdaq

21.   

Johannesburg

22.    

Jordan ( Amman )

23.  

Korea

24.  

Kuwait

25.    

Lebanon Beirut Stock Exchange

26.   

Lima

27.  

Ljublana

28.   

London

29.  

Luxembourg

30.   

Malaysia

31.   

Malta

32.   

Mauritius

33.  

Mexico

34. 

Montreal

35.   

Mumbai

36.  

Nasdaq

37.  

National Stock Exchange of India

38.  

New York

39.   

New Zealand

40. 

Oman Muscat Securities Market

41.     

OMX ( Stockholm , Copenhagen and Helsinki )

42. 

Osaka

43. 

Oslo

44.  

Pakistan Islamabad Stock Exchange

45.   

Pakistan Lahore Stock Exchange

46.   

Pakistan – The Karachi Stock Exchange

47.    

Philippines

48.   

Qatar Doha Securities Market

49.     

Santiago

50.   

Sao Paulo

51.  

Shanghai

52.   

Shenzhen

53.  

Singapore

54.   

SWX ( Switzerland )

55.   

Taiwan

56.   

Tehran

57.   

Tel-Aviv

58.   

Thailand

59.   

Tokyo

60.   

Toronto

61. 

UAE – Abu Dhabi Securities Market

62.     

UAE – Dubai Financial Market

63.  

UAE – Dubai International Financial Exchange

64. 

Vietnam

65. 

Warsaw

66. 

Wiener Borse