Hong Kong Exchange to allow more derivatives listings

The Stock Exchange of Hong Kong, a unit of Hong Kong Exchanges and Clearing Limited (HKEx), said it is changing its main board listing rules from July 1 to allow more derivatives products, such as equity-linked instruments (ELIs), to be listed on the exchange.

The exchange said it has amended various chapters and appendices to broaden the scope of the products allowed, as legal documentation, so far, has only dealt with the listing of derivative warrants. From July, the exchange will permit listings of derivatives based on securities, currencies, commodities and other assets or combinations of assets.

The exchange has also streamlined the listing application procedures for structured products.

Specific rules for the listing of ELIs, such as maturity, which has to be between 28 calendar days and two years, have also been laid out by the exchange. Hong Kong’s first ELIs are expected to be listed in the third quarter of the year and the HKEx will offer ELI education programmes to interested investors.

“HKEx is confident that the listing and trading of ELI on the Stock Exchange will enhance the product range available to investors and issuers,” said an HKEx spokesman.

Among other changes, the exchange abolished the quota of shares in a company that are subject to derivative warrants issuance, and structured products, excluding ELIs, may have maturities of up to five years.

The exchange said it will post its new regulation on its web site, www.hkex.com.hk.