Transcript Strategic Challenges Facing HKEx

HKEx Year-end Review 2003
Paul Chow
Chief Executive, Hong Kong Exchanges and Clearing Limited
22 December 2003
1
HKEx 2003 Market Highlights
Securities Market
Funds raised
Main Board:
GEM:
Funds raised by IPOs
Main Board:
GEM:
Funds raised in the
secondary market
Main Board:
GEM:
2003
2002
Change
(As of 18 Dec)
(year-end)
(%)
HK$ 206.2 bil*
110.5 bil
86.61
HK$ 201.8 bil
101.4 bil
99.01
HK$ 4.4 bil
9.1 bil
-51.65
HK$ 57.8 bil
52.0 bil
11.15
HK$ 55.7 bil
45.0 bil
23.78
HK$ 2.1 bil
7.0 bil
-70.00
HK$ 148.4 bil^
58.5 bil
153.68
HK$ 146.0 bil
56.4 bil
158.87
HK$ 2.4 bil
2.1 bil
14.29
* Figures may not add up due to rounding
^ Include funds raised by issue of new shares only
2
HKEx 2003 Market Highlights
Securities Market
Funds raised in H-share and
red-chip markets
(cont’d)
2003
2002
Change
(As of 18 Dec)
(year-end)
(%)
HK$ 50.8 bil
70.8 bil
-28.25
HK$ 49.4 bil
69.6 bil
-29.02
HK$ 1.4 bil
1.2 bil
16.67
New listings
72
117
-38.46
Main Board:
45^
60^
-25.00
27
57
-52.63
1,036
851
185
978
812
166
5.93
4.80
11.45
Main Board:
GEM:
GEM:
No. of listed companies
Main Board:
GEM:
^ including two and six GEM companies that have switched to the Main Board for listing in 2002 and
2003 respectively
3
HKEx 2003 Market Highlights
(cont’d)
Securities Market
2003
2002
Change
(As of 18 Dec)
(year-end)
(%)
HK$ 10.29 bil
6.65 bil
54.74
Main Board:
HK$ 10.14 bil
6.47 bil
56.72
GEM:
HK$ 0.15 bil
0.18 bil
-16.67
Closing Hang Seng Index
12240.3
9321.3
31.32
World ranking
(in terms of market capitalisation)
Eighth*
Tenth
Average daily turnover in the
secondary market
* as of end Oct
4
HKEx 2003 Market Highlights
(cont’d)
Derivatives Market
2003
2002
(As of 18 Dec) (year-end)
Change
(%)
Total Volume (Contracts)
Total Futures
7,844,565
6,228,037
25.96
HSI Futures
Record high daily volume: 104,534 contracts
(26 Aug 03);
6,523,781
4,802,422
35.84
Mini-HSI Futures
Record high daily volume: 8,868 contracts
(25 Sep 03);
Record high open interest: 4,256 contracts
(12 May 03)
1,222,796
1,107,964
10.36
21,934
N/A
H-shares Index Futures
(Introduced on 8 Dec 03)
5
HKEx 2003 Market Highlights
(cont’d)
Derivatives Market
Total Options
2003
2002
Change
(As of 18 Dec)
(year-end)
(%)
6,184,089
4,801,367
28.80
HSI Options
Record high daily volume:
20,382 contracts (31 Mar 03)
Record high open interest:
150,256 contracts (27 Mar 03)
2,085,498
1,070,431
94.83
Stock Options
Record high open interest:
798,161 contracts (18 Dec 03)
4,067,090
3,724,705
9.19
31,501
6,176
410.06
Mini-HSI Options
(Introduced on 18 Nov 02)
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2003 Milestones
January
May
•
• Announced the appointment of members to the Main Board and GEM Listing
Committees with overlapping membership to provide greater flexibility
•
Published consultation
conclusions on proposed
amendments to the Listing
Rules relating to corporate
governance issues
• Jointly published the Consultation Paper on Regulation of Sponsors and IFAs
• The final phase of CCASS/3 was introduced with the rollout of Participant
Gateway
Held listing promotion
conference in Harbin
• Abolished more fees and charges for Exchange Participants
January
May
March
June
April
March
April
• Launched S&P/HKEx
LargeCap Index and
S&P/HKEx GEM Index
•
Formed new board of directors and re-appointed Charles Lee as
Chairman
•
Signed MOU with SHFE on development of energy derivatives
• Amended guidelines for
gambling activities
undertaken by listing
applicants and/or listed
issuers
•
Appointed Paul Chow as Chief Executive
•
Abolished some fees for Exchange Participants
•
Amendments to Main Board and GEM Listing Rules and new
disclosure of interests mechanism became effective with the SFO
June
• Revised organisation
structure to improve
operational efficiency
• Prioritised
development projects
7
2003 Milestones
July
September
November
• Began the
strategic
planning
process
• Amended Listing Rules for
listing and trading of
collective investment
schemes authorised by the
SFC
•
Opened Beijing Representative Office under the CEPA,
and held a conference in Beijing marking the 10th
anniversary of the listing of Mainland enterprises in
Hong Kong
•
Awarded Diamond Award by 2003 HKSA Best Corporate
Governance Disclosure Awards in the non-HSI Category
•
Held listing promotion conference in Hangzhou
July
September
August
November
October
December
August
October
December
• Held listing promotion conference
in Guangzhou and Fuzhou
• Issued consultation paper on proposed
operational model for scripless securities
market
• Introduced H-shares
Index Futures
• Abolished more fees and charges
for Exchange Participants
• Upgraded HKATS
• Finalised the strategic plan for 2004 - 2006
8
Direction & Strategies for the coming three years
Positioning

Being the international gateway for Mainland issuers

Being the gateway for international players to access
China
Strategies

Becoming a Mainland partner

Building a quality market

Becoming one of the world’s larger exchanges with
international standards and practices
9
2004 Key initiatives - Becoming a Mainland Partner
China Listing
 Attract more major, high quality Mainland enterprises
 Enhance listing services to Mainland issuers
China Products
 Develop China-related products
Cooperation
 Explore crude oil contract with Shanghai Futures
Exchange
 Explore cooperation with Shenzhen Stock Exchange
10
2004 Key initiatives - Building a quality market
Strengthen Market Infrastructures

Introduce DCASS

Strengthen the reliability, security and availability of market
systems

Study the potential and market impacts of a scripless market

Study Enhanced CCASS Investor Participant Account services

Explore the possibility of network consolidation (i.e. AMS/3,
CCASS/3, HKATS and Market Data Feed) to seek cost reduction
at both HKEx, and Exchange and Clearing House Participants
without sacrificing service quality
11
2004 Key initiatives – Building a quality market
Improve Investor Protection

Improve the listing regulatory structure based upon
the outcome of the Government review

Revamp the Listing Committee’s role in decision-making
and related structures
 Improve disciplinary process

Promote the statutory backing for selected Listing Rules

Further develop corporate governance by introducing
new rules and code

Publish consultation conclusions on initial listing criteria and
continuing obligations

Consider delisting mechanism

Consider market views on regulation of sponsors and IFAs
12
2004 Key initiatives – Building a quality market
Improve Investor Protection (cont’d)

Improve the transparency of the odd lot market

Enhance investor education

Strengthen market education and director training
13
2004 Key initiatives – Building a quality market
Improve Market Liquidity

Review the trading spreads in the securities market

Review Exchange Traded Fund market making mechanism

Study the introduction of more structured products

Review the stock option market and introduce more single
stock options

Study the introduction of H-shares index options
14
2004 Key initiatives – Consolidation




Continue to improve cost structure
Prioritise project and streamline workflow
Strengthen staff team
Improve risk management
15
Questions & Answers
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