Amendments to the definitions of specified Futures Exchanges SFEs and specified Stock Exchanges SSEs in Parts 2 and 3 to Schedule 1 of the Securities and Futures Ordinance SFO took effect on 18 July The amendments followed the SFC's release of its Consultation Conclusions on Proposed Amendments to Specified Stock and Futures Exchanges Conclusions on 11 May and the Securities and Futures Ordinance Amendment of Schedule 1 Notice on 25 April The principal amendments are:.

The Inland Revenue Ordinance IRO refers to them in relation to tax breaks. The Trustee Ordinance, Gambling Ordinance, Occupational Retirement Schemes Ordinance and Mass Transit Railway Ordinance also refer to them. This newsletter sets out the amendments to the SFO, their key implications under the SFO and IRO. A copy of the notice amending Schedule 1 SFO can be viewed here Archived copy.

Seven futures exchanges from Brazil, China and India have been added to Part 2 to Schedule 1 of the SFO:.

Introduction to Regulatory Framework

Under the SFO, a licence or registration from the SFC is generally required to carry out each regulated activity. Type 3 trading by a Type 1 or Type 2 licensee on a SSE or SFE is thus exempted from Type 3 licensing requirements.

The SFC assesses individuals seeking to engage in regulated activities. The addition of exchanges extends recognition of competence to applicants with experience in emerging markets.

Market infrastructure & trading | Securities & Futures Commission of Hong Kong

Under Section 6 a of Appendix E to the SFC Guidelines on Competence, individuals who demonstrate substantial experience, such as eight years in a market with a SFE or SSE, may obtain conditional exemption from sitting the local regulatory framework paper.

Part XV of the SFO imposes obligations on corporate insiders to disclose their shareholdings in listed corporations. The disclosure obligation extends to interests under equity derivatives. Section 1 stipulates that equity derivatives include rights, options or interests in underlying shares. Hence, holders, writers and issuers of equity derivatives are taken to be interested in underlying shares and must disclose such interest. Section 4 relaxes the duty of disclosure under Section for listed corporations, including those listed on an SSE or their wholly owned subsidiary.

It exempts them from disclosing the name and address of any person whose directions or instructions they, or their directors, are accustomed or obliged to follow. An equivalent corporation has equivalent, regulated dealings in eight jurisdictions specified in Schedule 1 to the Rules.

Under Part 1 of Schedule 1 to the SFO, a recognised counterparty is not a client of a corporation licensed for leveraged foreign exchange trading. Trading corporations are relieved from client-related obligations. For example, the Securities and Futures Client Money Rules do not apply.

They do not have to pay recognised counterparties' monies into a segregated account. Accounting and compliance are affected. For example, pursuant to Section 34 1 of the FRR, trading corporations must factor amounts receivable from and cash deposited with a recognized counterparty into their liquid assets.

A stock's stabilising period is determined in accordance with Section 2 1 of the Securities and Futures Price Stabilizing Rules. When a stock starts trading on an overseas SSE, its stabilising period commences. Stabilising action may only be taken during this period. The addition of exchanges extends tax breaks to offshore funds trading futures on them.

The Revenue Profits Tax Exemption for Offshore Funds Ordinance in inserted the relevant provisions in the IRO. Pursuant to Sections 20AB and 20AC of the IRO, offshore funds are exempt from tax chargeable on profits from futures contracts, retrospectively from the year of assessment onwards. Futures contracts are defined in Schedule 16 to include:. Derivatives popular with offshore funds, such as cash-settled commodity futures and index-based contracts, fall within the wide ambit of contracts for differences.

The Conclusions anticipate that Hong Kong's development as an international finance centre in general and an asset management centre in particular would thus be facilitated. Hong Kong would potentially attract more investment from offshore funds.

News Releases - SYNNEX Corporation

Benefits include increased market liquidity and higher employment in downstream service sectors. The SFC published a consultation paper on proposed amendments to the Securities and Futures Financial Resources Rules Consultation Paper in May The proposed amendments would update the list of exchanges specified Specified Exchanges in Schedule 3 for which the FRR prescribe treatments for assets and liabilities arising from, or in relation to, dealings in futures and options contracts traded on those exchanges.

For example, amounts receivable from and cash deposited with a clearing house of a Specified Exchange in respect of futures or options contracts trading can be included as liquid assets.

Specified Exchanges are also mentioned in Schedule 2 in relation to haircut percentages for shares. The key proposals are:. The SFC currently grants FRR modifications to licensed corporations dealing in futures or options products that are traded on certain exchanges which are not specified in the FRR on an individual firm basis in order to alleviate their FRR compliance burden.

These modifications are published on the SFC website for the reference of other licensed corporations. The proposed amendments to the FRR are intended to reduce compliance costs and facilitate market development. Updates to specified exchanges would largely mirror those in the SFO with the following exceptions.

Bursa Malaysia Derivatives Berhad is specified in the FRR, but not the SFO. It was formerly Malaysian Derivatives Exchange Berhad. London Stock Exchange plc - SEAQ International is deleted from Schedule 2 of the FRR. SEAQ International was never specified in the SFO. Osaka Securities Exchange Co. Japanese Association of Securities Dealers Automated Quotations was updated as Jasdaq Securities Exchange Inc - JASDAQ in the Conclusions, then deleted from the SFO.

This is attributable to the merger between OSE and JASDAQ in April OSE now operates both JASDAQ and NEO. It recently announced a merger with the Tokyo Stock Exchange, which will be dissolved.

The SFC has indicated that it will not be updating the SFO frequently to reflect such changes. However, the merger may be reflected in forthcoming consultation conclusions. This newsletter provides a summary only of the Consultation Paper's proposals.

The Consultation Paper and Notice on the SFO are available on the SFC's website here see archive and here see archive respectively. Its contents do not constitute legal advice and it should not be regarded as a substitute for detailed advice in individual cases.

Transmission of this information is not intended to create and receipt does not constitute a lawyer-client relationship between Charltons and the user or browser. Charltons is not responsible for any third party content which can be accessed through the website. If you do not wish to receive this newsletter please let us know by emailing us at: Facebook Twitter Google LinkedIn Newsletter Phone. Amendments To The Definitions Of Specified Stock And Futures Exchanges Effective 18 July And Proposed Amendments To The Securities And Futures Financial Resources Rules 1.

Amendments To The Definitions Of Specified Stock And Futures Exchanges Effective 18 July 2. Proposed Amendments To The Securities And Futures Financial Resources Rules FRR 1. Amendments To The Definitions Of Specified Stock And Futures Exchanges Effective 18 July Introduction Amendments to the definitions of specified Futures Exchanges SFEs and specified Stock Exchanges SSEs in Parts 2 and 3 to Schedule 1 of the Securities and Futures Ordinance SFO took effect on 18 July The principal amendments are: New Exchanges In The SFO Seven futures exchanges from Brazil, China and India have been added to Part 2 to Schedule 1 of the SFO: Two stock exchanges from India have been added to Part 3.

BSE Limited, and National Stock Exchange of India Limited. Updated Exchanges In The SFO Updated Futures Exchanges The following futures exchanges in Part 2 of Schedule 1 to the SFO have been updated. ASX Limited formerly Australian Stock Exchange Australian Securities Exchange Limited formerly Sydney Futures Exchange, Ltd.

Board of Trade of the City of Chicago, Inc. NASDAQ OMX PHLX LLC formerly Philadelphia Stock Exchange NASDAQ OMX Stockholm AB formerly Stockholmsborsen New York Mercantile Exchange, Inc.

Nagoya Stock Exchange, Inc. Exemption of Individuals from Local Regulatory Framework Paper The SFC assesses individuals seeking to engage in regulated activities. Exemption from Disclosure of Interests Obligations Part XV of the SFO imposes obligations on corporate insiders to disclose their shareholdings in listed corporations. Recognised Counterparty Status Under Section 3 a to b of the Securities and Futures Recognised Counterparty Rules: Commencement of Securities Price Stabilising Period A stock's stabilising period is determined in accordance with Section 2 1 of the Securities and Futures Price Stabilizing Rules.

Exemption of Offshore Funds from Profits Tax The addition of exchanges extends tax breaks to offshore funds trading futures on them.

Approved or authorized entities | Securities & Futures Commission of Hong Kong

Futures contracts are defined in Schedule 16 to include: Proposed Amendments To The Securities And Futures Financial Resources Rules FRR Introduction The SFC published a consultation paper on proposed amendments to the Securities and Futures Financial Resources Rules Consultation Paper in May The key proposals are: The consultation conclusions on these proposals have not yet been published. New Exchanges in the FRR The four new exchanges would be: Hong Kong Mercantile Exchange Limited; Taiwan Futures Exchange Corporation; Thailand Futures Exchange Public Company Limited, and Tokyo Commodity Exchange, Inc.

None are specified in the SFO. Updated Exchanges in the FRR Updates to specified exchanges would largely mirror those in the SFO with the following exceptions.

Best Boutique Firm Asian Legal Business Awards. This newsletter is for information purposes only. Charltons Dominion Centre,12th Floor Queen's Road East, Hong Kong. Charltons - Hong Kong Law Newsletter - Issue - 26 November Definitions Of Specified Stock And Futures Exchanges Proposed Amendments To The Securities And Futures Financial Resources Rules Exchanges In The SFO Amendments to the Definitions Of Specified Stock And Futures Exchanges Consultation paper on Proposed Amendments To The Securities And Futures Financial Resources Rules New and Updated New Exchanges In The SFO New and Updated Exchanges in the Securities And Futures Financial Resources Rules FRR Securities And Futures Financial Resources Rules FRR Amendments To The Definitions Of Specified Stock And Futures Exchanges as of 18 July Hong Kong Stock Exchange Part 2 and 3 of Schedule 1 to the SFO SFO Consultation.

Hong Kong Stock Exchange Publishes Guidance on pre-IPO Investments. SFC Holds IPO Sponsor Principals Jointly and Severally Liable in Discharge of Responsibilities.