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Hong Kong Exchanges and Clearing Limited Year-end Review 20 December 2001 1 2001 Market Highlights (As of 14 December) Funds raised Main Board: GEM: Funds raised by IPOs Main Board: GEM: Funds raised in the secondary market Funds raised in H-shares and red-chips markets New listings Expected at year-end: HK$57.7 bil HK$53.1 bil HK$4.6 bil HK$23.8 bil HK$20.5 bil HK$3.3 bil HK$33.9 bil HK$24.4 bil 80 (Main Board: 30; GEM: 50) 89 (Main Board: 31; GEM: 58) 2 2001 Milestones - Commencement of trading of regional exchange traded funds - Launched MSCI China Free Index Futures contracts - New Main Board listing rules requirement for website posting of listed issuers' announcements together with issuance of paid ad took effect - Hosted Asia-Pacific regional meeting of ISSA in Hong Kong - Announced the guidelines for issuers with negative or negligible net tangible assets - Signed MOU with Shanghai and Shenzhen stock exchanges on the development of a China securities market database - Signed MOU with the Stock Exchange of Thailand on sharing of regulatory information - Consulted market on derivative warrants rules - Commencement of trading of regional exchange traded funds --- Announced Allowed Board companies with the policy on Main Launched MSCI China Free Index Futures contracts granting waiver to issuers for two language -- distributing New Main listing rules requirement for website posting Launched ORS and implemented new versions of annual Board and primary listings and applicants to adopt interim reports of listed issuers' announcements together with issuance of paid order types and revised trading International Accounting Standards, and ad took effect Announced the policy on granting waiver -- Debut of HKEx quarterly newsletter Asia-Pacific regional meeting ofatISSA May inoverseasHong Kong parameters for AMS/3 January - Hosted GEM allowed Conference Main Board Beijing’s - Exchange Announced the for guidelines for issuers two with negative or to issuers distributing language - incorporated Signednet MOU with the SFC on oversight, Zhongguancun companies Science Park with secondary negligible tangible assets February March June April of annual and interim reports - versions Signed MOU with Shanghai and Shenzhen stock - Allowed MainParticipants Board companies exchanges on supervision of Exchange listings and applicants US - Launched ORS and implemented with primary to listings adopt and theorder development market database new types and revised of a China securities applicants to adopt International - Debut of HKEx - GEM Conference trading parameters for AMS/3 Accounting Standards, and quarterly newsletter and market surveillance at Beijing’s GAAP -- Signed Signed MOU Thailand on sharing MOU with the SFC onwith the Stock Exchange allowed Main of Board overseasExchange Zhongguancun oversight, supervision of incorporated companies with Science Park of regulatory information Participants and market secondary listings and applicants -- Exchange GEM Conference in Shanghai surveillance to adopt US GAAP Consulted market on derivative- warrants GEM Conferencerules in Shanghai 3 2001 Milestones --------- Tick rule exemption on index arbitrage and Launched three-year EFN Futures contracts market making transactions took effect Standardised stock andWeb options Launched China Stockfutures Markets with New rules and market making mechanism for contract specifications and introduced Shanghai and Shenzhen stock exchanges Introduced Block Trading Facility Migrated stock options trading to derivative warrants took effect Signed MOU with Luxemburg Stock Exchange more local stock options Launched International Stock Futures HKATS Consulted market on extended trading August October November Signed MOU with Kuala Lumpur Stock on sharing of regulatory information Joint announcement with the SFC on the and Options Launched remote trading access hours Exchange on sharing of regulatory information September July December HKEx accredited by the SFC to offer continuous amendments toHK the GEM Listing Rules Received Asia Risk magazine award for programme for HKATS (GL Trade in Became the 1st listed company assigned professional training to industry professionals a GEM Conference with Sichuan derivatives exchange the year corporate governance score August and Radianz inof November) Hosted Futures & Options World Conference Provincial Government Chengdu Announced the introduction of index basket GEM Conference in in Chongqing during order and pre-opening Chongqing-Hong Kongsession week 4 - Migrated stock options trading to HKATS - Launched remote trading access programme for HKATS (GL Trade in August and Radianz in November) - Introduced Block Trading Facility - Launched International Stock Futures and Options - Received Asia Risk magazine award for derivatives exchange of the year - Standardised stock futures and options contract specifications and introduced more local stock options - Joint announcement with the SFC on the amendments to the GEM Listing Rules - GEM Conference with Sichuan Provincial Government in Chengdu - Consulted market on extended trading hours - Launched three-year EFN Futures contracts - Launched China Stock Markets Web with Shanghai and Shenzhen stock exchanges - Signed MOU with Luxemburg Stock Exchange on sharing of regulatory information - HKEx accredited by the SFC to offer continuous professional training to industry professionals - Hosted Futures & Options World Conference - GEM Conference in Chongqing during ChongqingHong Kong week - Tick rule exemption on index arbitrage and market making transactions took effect - New rules and market making mechanism for derivative warrants took effect - Signed MOU with Kuala Lumpur Stock Exchange on sharing of regulatory information - Became the 1st HK listed company assigned a corporate governance score - Announced the introduction of index basket order and pre-opening session Looking Ahead Market Development Introduce pre-market opening and basket orders in Cash Market Introduce extended trading hours in Cash and Derivatives markets Launch remote trading access for Cash Market Review the current board lot system 5 Looking Ahead Market Development (cont’d) Consult market on Listing Rules related to corporate governance Complete review of Main Board and GEM Listing Rules Evaluate dissemination arrangements for Main Board listed companies’ announcements Review delisting procedures 6 Looking Ahead Market Development (cont’d) Evaluate operation of Phase 1 derivative warrants rule changes Review rules for listing of foreign issues Further roll-out Derivatives Market’s Remote Trading Access programme Consolidation of clearing houses 7 Looking Ahead Market Infrastructure Activate AMS/3 market making functions Implement scheduled upgrades and enhancements to HKATS Launch CCASS/3 and DCASS Launch e-Submission system Work towards scripless securities market 8 Looking Ahead Product and Services Introduce more international and regional benchmark financial products Introduce Equity Linked Notes (ELN) Launch Brokers’ Electronic Support Services (BESS) Evaluate third party clearing for the cash market 9 Looking Ahead China and International Development Strategy Further develop ties with Mainland exchanges Further develop business network and continue promotional and educational activities on Mainland Further explore alliances with other exchanges 10 Thank you 11