Hong Kong SFC Releases Revised Guidance on Short-Selling Reporting & Stock Lending Record to Prepare for Launch of HKD-RMB Dual Counter Model on 19th June 2023
7th June 2023 | Hong Kong
Hong Kong Securities & Futures Commission (SFC) has released the revised guidance on short-selling reporting and stock lending record to prepare for the launch of HKD-RMB dual counter model on 19th June 2023 (Monday) in the Hong Kong securities market. Hong Kong SFC: “The Guidance Note clarifies that as HKD and RMB counters for the same security are of the same class, the following inter-counter transactions fall within the current framework: (1) when an investor buys a security at one counter first and sells at another, the sale is considered an ordinary sale, and (2) when a Dual Counter Model market maker sells a security at one counter and buys it at another, the inter-counter transaction falls under the current exemption, subject to certain conditions.” See below more info
“ Hong Kong SFC Released Revised Guidance on Short-Selling Reporting & Stock Lending Record to Prepare for Launch of HKD-RMB Dual Counter Model on 19th June 2023 “
Hong Kong SFC Released Revised Guidance on Short-Selling Reporting & Stock Lending Record to Prepare for Launch of HKD-RMB Dual Counter Model on 19th June 2023
SFC updates guidance to prepare for HKD-RMB Dual Counter Model
6th June 2023 – The Securities and Futures Commission (SFC) today published revised guidance on short selling reporting and stock lending record keeping to prepare for the launch of the HKD-RMB Dual Counter Model in the Hong Kong securities market (Note 1) on 19 June 2023.
The Guidance Note on Short Selling Reporting and Stock Lending Record Keeping Requirements has been updated to cover inter-counter transactions of securities under the Dual Counter Model (Note 2). Corresponding revisions have also been made to the SFC’s Frequently Asked Questions for Short Position Reporting.
The Guidance Note clarifies that as HKD and RMB counters for the same security are of the same class, the following inter-counter transactions fall within the current framework:
(1) when an investor buys a security at one counter first and sells at another, the sale is considered an ordinary sale, and
(2) when a Dual Counter Model market maker sells a security at one counter and buys it at another, the inter-counter transaction falls under the current exemption, subject to certain conditions (Note 3).
“The SFC supports dual counter trading, which will help promote the renminbi’s internationalisation and use as an investment currency,” said Ms Julia Leung, the SFC’s Chief Executive Officer. “An effective and efficient mechanism provided for market makers will help promote liquidity and minimise price differences between the two counters.”
More information about the Dual Counter Model can be found on the website of Hong Kong Exchanges and Clearing Limited.
Notes:
- The Dual Counter Model supports trading of securities in both Hong Kong dollar (HKD) and renminbi (RMB) that are of the same class and issued by the same issuer, including their trading under two separate counters and transfer of shares between the two counters.
- The revised Guidance Note provides examples of HKD-RMB inter-counter transactions to be conducted under the framework of the Securities and Futures Ordinance (Cap 571) and the Securities and Futures (Short Selling and Securities Borrowing and Lending (Miscellaneous)) Rules.
- The relevant exemption is section 3(1)(c) of the Securities and Futures (Short Selling and Securities Borrowing and Lending (Miscellaneous)) Rules.
Hong Kong Exchange to Launch CNY & USD Dual-Currency Share Trading on 19th June 2023, More than 20 Hong Kong Listed Companies Have Applied Including Alibaba, Kuaishou Technology & Hong Kong Exchange
20th May 2023 – Hong Kong Exchange (HKEX) will be launching CNY and USD dual-currency share trading on 19th June 2023 (Monday), with more than 20 Hong Kong listed companies applying including Alibaba, Kuaishou Technology & Hong Kong Exchange (HKEX). The CNY and USD dual-currency share trading will allow investors to trade in the shares in either currency, and transferable without a change in beneficial owner (same share class holding). See below for announcement. CNY ~ Chinese Yuan, RMB
HKEX to Launch HKD-RMB Dual Counter Model on 19 June 2023
19th May 2023 – Hong Kong Exchanges and Clearing Limited (HKEX) is today (Friday) pleased to announce that it will launch the Hong Kong Dollar (HKD)-Renminbi (RMB) Dual Counter Model (Model) and the Dual Counter Market Making Programme in its securities market on 19 June 2023, subject to market readiness. This new model and programme will further support the trading and settlement of RMB-denominated securities in Hong Kong.
HKEX Chief Executive Officer, Nicolas Aguzin said: “The new Dual Counter Model is another key milestone in the development of Hong Kong’s capital markets. It will give issuers and investors more choice, it will enrich Hong Kong’s RMB products ecosystem, cementing its role as the world’s leading offshore RMB hub, and it will support the ongoing internationalisation of the RMB.”
“I would like to express our thanks to all those involved in supporting us on the design and rollout of this exciting initiative and we look forward to working with everyone to continue building a truly rich, liquid and vibrant marketplace of the future,” Mr Aguzin added.
HKEX has published relevant rule amendments for the introduction of the Model and the Dual Counter Market Making Programme. Interested Exchange Participants may now apply to become a Dual Counter Market Maker for eligible securities under the Model in accordance with the relevant rules.
The Dual Counter Market Makers will offer buy and sell quotes for the RMB-denominated securities trading, providing liquidity in the RMB counter and minimising price discrepancies between the HKD and RMB counters. The initial list of Dual Counter Securities and Dual Counter Market Makers will be announced in due course.
Under the Model, investors will be able to interchange securities listed in both HKD and RMB counters. Securities under the two counters are of the same class and holdings of securities in the two counters can be transferred without change of beneficial ownership.
As part of the preparation for the launch, HKEX has arranged a series of testing and practice sessions between May and June to support market participants on the trading and settlement of securities under the Model.
Further information about the launch of the Model, including related rules, FAQs and circulars can be found on the HKEX website.
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