On 21 February 2011, the Securities and Futures Commission ("SFC") commenced a two-month consultation inviting comments on proposals to amend the lists of "specified" local and overseas stock and futures exchanges contained in Schedule 1 to the Securities and Futures Ordinance ("SFO") (the "Lists"). Most significantly, the SFC proposed including a selection of nine exchanges from Brazil, India and the People's Republic of China to the Lists.
Remarks: Exchanges included in the Lists are given "specified" status for certain purposes relating to licensing, recognised counterparty status, disclosure of interests and price stabilising. Generally, these purposes relate to a relaxation of certain requirements under the SFO or the SFC's rules and guidelines, such as recognition of an individual's work experience in markets with specified exchanges for the purposes of exemption from licensing examinations. Certain other legislation in Hong Kong also refers to the Lists, such as the Inland Revenue Ordinance. The SFC has stated that the addition of these nine exchanges to the Lists would facilitate the development of Hong Kong as an international financial centre by expanding the scope of tax exemptions to offshore funds with operations in Hong Kong engaged in futures trading.
The expansion of the Lists to include certain exchanges from China (i.e. China Financial Futures Exchange, Dalian Commodity Exchange, Shanghai Futures Exchange and Zhengzhou Commodity Exchange) would be beneficial to persons and firms with businesses, experience or other connections with the relevant markets in China. It is expected that the SFC's proposals will be welcomed, although it is likely the SFC will need to clarify its decision for selecting the nine exchanges to include in the Lists and not other exchanges in these countries.
The SFC's press release and the consultation paper can be viewed HERE.