Legislation & Regulatory Handbook
Legislation
Securities and Futures Ordinance (including subsidiary legislation)
Companies Ordinance (including subsidiary legislation)
Legislative Amendments
Part XV - Disclosure of Interests
Materials relating to Securities and Futures Bill
Derivation Table
Others
Regulatory Handbook
Volume 1 - Regulatory Philosophy
Volume 2 - Business Standards
Codes, Guidelines & Circulars
Archives - Codes, Guidelines & Circulars
法例及监管手册
法例
证券及期货条例(包括附属法例)
公司条例(包括附属法例)
法例修订
第XV部─披露权益
有关证券及期货条例草案的资料
证券及期货条例条文来源表
其他
监管手册
第1册─监管理念
第2册─业务准则
守则、指引及通函
档案资料─守则、指引及通函
1.Legislation
For enquiries, please email to:
enquiry@sfc.hk .
The SFC is the statutory regulator for the securities and futures market in Hong Kong. It administers the Securities and Futures Ordinance and parts of the Companies Ordinance. Its functions and responsibilities are also set out in these Ordinances.
This section of the website offers comprehensive resources relating to these Ordinances.
Page last updated: 18 May 2005
法例
如欲查询，请电邮至：
enquiry@sfc.hk .
证监会是监管香港证券及期货市场的法定监管机构。证监会负责执行《证券及期货条例》及部分《公司条例》。这两条条例均载有证监会有关的职能及职责。
这个环节提供有关该等条例的全面资料。
2.The Securities and Futures Ordinance (including subsidiary legislation)
This provides a link to the text of the Ordinance including subsidiary legislation at the Bilingual Laws Information System operated by the Department of Justice of the Hong Kong Special Administrative Region Government.
An Ordinance to consolidate and amend the law relating to financial products, the securities and futures market and the securities and futures industry, the regulation of activities and other matters connected with financial products, the securities and futures market and the securities and futures industry, the protection of investors, and other matters incidental thereto or connected therewith, and for connected purposes.
[1 April 2003] L.N. 12 of 2003
(Originally 5 of 2002)
PART I
PRELIMINARY
(1) This Ordinance may be cited as the Securities and Futures Ordinance.
(2) (Omitted as spent)
Section: 2 Heading: Interpretation Version Date: 01/04/2003
(1) Schedule 1 contains interpretation provisions which apply to this Ordinance in accordance with their terms.
(2) Individual Parts and provisions of this Ordinance contain interpretation provisions which have application in accordance with their terms.
(3) The Commission may, by notice published in the Gazette, amend Parts 2, 3, 4 and 5 of Schedule 1.
Section: 3 Heading: Securities and Futures Commission Version Date: 01/04/2003
PART II
SECURITIES AND FUTURES COMMISSION
Division 1-The Commission
(1) Notwithstanding the repeal of the Securities and Futures Commission Ordinance (Cap 24) under section 406, the body established by section 3 of that Ordinance as the Securities and Futures Commission shall continue in existence in its original name as a body corporate with power to sue and be sued in that name.
(2) Subject to the provisions of this Ordinance, the corporate identity of the Commission, and the rights, privileges, powers, obligations and liabilities of the Commission and those of others in relation to the Commission, are not affected by the repeal of the Securities and Futures Commission Ordinance (Cap 24) under section 406, and any reference to the Commission (whether by reference to that Ordinance or otherwise) in any Ordinance or any instrument, record or document, or in or for the purposes of any proceedings, agreement or arrangement (whether in writing or not) shall be construed accordingly.
(3) The receipts of the Commission are not subject to taxation under the Inland Revenue Ordinance (Cap 112).
(4) Part 1 of Schedule 2 contains provisions relating to the constitution and proceedings of and other matters relating to the Commission.
Section: 4 Heading: Regulatory objectives of Commission Version Date: 01/04/2003
The regulatory objectives of the Commission are-
(a) to maintain and promote the fairness, efficiency, competitiveness, transparency and orderliness of the securities and futures industry;
(b) to promote understanding by the public of the operation and functioning of the securities and futures industry;
(c) to provide protection for members of the public investing in or holding financial products;
(d) to minimize crime and misconduct in the securities and futures industry;
(e) to reduce systemic risks in the securities and futures industry; and
(f) to assist the Financial Secretary in maintaining the financial stability of Hong Kong by taking appropriate steps in relation to the securities and futures industry.
Section: 5 Heading: Functions and powers of Commission Version Date: 01/04/2003
(1) The functions of the Commission are, so far as reasonably practicable-
(a) to take such steps as it considers appropriate to maintain and promote the fairness, efficiency, competitiveness, transparency and orderliness of the securities and futures industry;
(b) to supervise, monitor and regulate-
(i) the activities carried on by recognized exchange companies, recognized clearing houses, recognized exchange controllers or recognized investor compensation companies, or by persons carrying on activities regulated by the Commission under any of the relevant provisions, other than registered institutions; and
(ii) such of the activities carried on by registered institutions as are required to be regulated by the Commission under any of the relevant provisions;
(c) to promote and develop an appropriate degree of self-regulation in the securities and futures industry;
(d) to promote, encourage and enforce the proper conduct, competence and integrity of persons carrying on activities regulated by the Commission under any of the relevant provisions in the conduct of such activities;
(e) to encourage the provision of sound, balanced and informed advice regarding transactions or activities related to financial products;
(f) to take such steps as it considers appropriate to ensure that the relevant provisions are complied with;
(g) to maintain and promote confidence in the securities and futures industry in such manner as it considers appropriate, including by the exercise of its discretion to disclose to the public any matter relating or incidental to the performance of any of its functions;
(h) to co-operate with and provide assistance to regulatory authorities or organizations, whether formed or established in Hong Kong or elsewhere;
(i) to promote understanding by the public of the securities and futures industry and of the benefits, risks and liabilities associated with investing in financial products;
(j) to encourage the public to appreciate the relative benefits of investing in financial products through persons carrying on activities regulated by the Commission under any of the relevant provisions;
(k) to promote understanding by the public of the importance of making informed decisions regarding transactions or activities related to financial products and of taking responsibility therefor;
(l) to secure an appropriate degree of protection for members of the public investing in or holding financial products, having regard to their degree of understanding and expertise in respect of investing in or holding financial products;
(m) to promote, encourage and enforce-
(i) the adoption of appropriate internal controls and risk management systems by persons carrying on activities regulated by the Commission under any of the relevant provisions, other than registered institutions; and
(ii) the adoption of appropriate internal controls and risk management systems by registered institutions in the conduct of activities regulated by the Commission under any of the relevant provisions;
(n) to suppress illegal, dishonourable and improper practices in the securities and futures industry;
(o) to take appropriate steps in relation to the securities and futures industry further to any requirement of the Financial Secretary for the purpose of providing assistance in maintaining the financial stability of Hong Kong;
(p) to recommend reforms of the law relating to the securities and futures industry;
(q) to advise the Financial Secretary on matters relating to the securities and futures industry and provide him with such information in relation thereto as it considers appropriate; and
(r) to perform functions conferred or imposed on it by or under this or any other Ordinance.
(2) Subsection (1)(c) does not limit or otherwise affect any other function of the Commission.
(3) The Commission, in performing any of its functions in relation to-
(a) any authorized financial institution as a registered institution or as an associated entity of an intermediary; or
(b) any person as an associated entity of an authorized financial institution that is a registered institution,
may rely, in whole or in part, on the supervision of such authorized financial institution or person (as the case may be) by the Monetary Authority.
(4) For the purposes of this Ordinance, the Commission may-
(a) acquire, hold and dispose of property of any description;
(b) make contracts or other agreements;
(c) receive and expend moneys;
(d) with the approval of the Financial Secretary, borrow money on security or other conditions;
(e) publish or otherwise make available materials (however described) indicating to persons who are, or who carry on activities, regulated by the Commission under any of the relevant provisions and, where the Commission considers appropriate, to any other persons the manner in which, in the absence of any particular consideration or circumstance, the Commission proposes to perform any of its functions; and
(f) publish or otherwise make available materials (however described) indicating to the public any matter relating or incidental to the performance of any of the functions of the Commission.
(5) Materials published or otherwise made available under subsection (4)(e) or (f) are not subsidiary legislation.
Section: 6 Heading: General duties of Commission Version Date: 01/04/2003
(1) In performing its functions, the Commission shall, so far as reasonably practicable, act in a way which-
(a) is compatible with its regulatory objectives; and
(b) it considers most appropriate for the purpose of meeting those objectives.
(2) In pursuing its regulatory objectives and performing its functions, the Commission shall have regard to-
(a) the international character of the securities and futures industry and the desirability of maintaining the status of Hong Kong as a competitive international financial centre;
(b) the desirability of facilitating innovation in connection with financial products and with activities regulated by the Commission under any of the relevant provisions;
(c) the principle that competition among persons carrying on activities regulated by the Commission under any of the relevant provisions should not be impeded unnecessarily;
(d) the importance of acting in a transparent manner, having regard to its obligations of preserving secrecy and confidentiality; and
(e) the need to make efficient use of its resources.
Section: 7 Heading: Advisory Committee Version Date: 01/04/2003
(1) There shall be an Advisory Committee to advise the Commission on matters of policy regarding any of its regulatory objectives and functions.
(2) The Advisory Committee is constituted in accordance with Part 1 of Schedule 2 and shall conduct its business in accordance with that Part.
(3) The Advisory Committee shall meet at least once every 3 months to advise the Commission.
(4) The Commission may request the Advisory Committee to advise it on matters of policy regarding any of its regulatory objectives and functions.
Section: 8 Heading: Commission may establish committees Version Date: 01/04/2003
(1) The Commission may establish-
(a) standing committees; and
(b) special committees.
(2) The Commission may refer a matter to a committee established under this section for consideration, inquiry or management.
(3) The Commission may appoint a person to be a member of a committee established under this section, whether or not the person is a member of the Commission, and may appoint a member of the committee to be the chairman of the committee.
(4) A reference of a matter to a committee under subsection (2) does not prevent the Commission from performing any of its functions.
(5) The Commission may-
(a) withdraw a reference under subsection (2) from a committee;
(b) revoke an appointment of a member or chairman of a committee under subsection (3).
(6) A committee established under this section may elect one of its members-
(a) to be its chairman if a chairman has not been appointed by the Commission under subsection (3); or
(b) to act as its chairman for any period during which a chairman appointed by the Commission under subsection (3) is unable to act as chairman due to illness, absence from Hong Kong or any other cause,
and may at any time remove the member so elected from the office of the chairman.
(7) A committee established under this section may, subject to the provisions of this Ordinance, regulate its own procedure and business.
(8) A committee established under this section shall meet when and where the chairman of the committee determines, subject to any procedure fixed by the committee and any direction given by the Commission under subsection (9).
(9) The Commission may give directions to a committee established under this section, whether generally or in any particular case, and whether regarding the manner in which it shall act or otherwise, and the committee shall act in accordance with any such directions.
Section: 9 Heading: Staff of Commission Version Date: 01/04/2003
(1) The Commission may employ persons for such remuneration and allowances, and on such other terms and conditions, as the Commission determines.
(2) The Commission may provide and maintain schemes (whether contributory or not) for the payment of retirement benefits, gratuities or other allowances to its employees and their dependants.
(3) The Commission may engage consultants, agents and advisers to assist it in the performance of its functions.
Section: 10 Heading: Delegation and sub-delegation of Commission's functions Version Date: 01/04/2003
(1) Subject to subsection (2), the Commission may delegate any of its functions to-
(a) a member of the Commission;
(b) a committee established under section 8; or
(c) an employee of the Commission, whether by reference to his name or to the office held by him.
(2) No delegation shall be made under subsection (1) in respect of-
(a) the power of the Commission to delegate under this section; or
(b) a function specified in Part 2 of Schedule 2.
(3) Where the Commission delegates a function under this section, it may at the same time authorize the delegate to sub-delegate the function and the authorization may contain restrictions or conditions on the exercise of the power to sub-delegate.
(4) A delegation or sub-delegation under this section does not prevent the Commission or its delegate from concurrently performing the function delegated or sub-delegated.
(5) The Commission may-
(a) revoke a delegation under this section;
(b) revoke an authorization in respect of a sub-delegation under this section,
whereupon the delegation or sub-delegation (as the case may be) shall cease to have effect.
(6) Where a person or committee purports to act pursuant to a delegation or sub-delegation under this section, he or it shall be presumed, unless the contrary is proved, to be acting in accordance with the terms of the delegation or sub-delegation.
(7) Without prejudice to subsection (4), where there is a delegation or sub-delegation under this section in respect of a function of the Commission, any reference in this or any other Ordinance to the Commission in connection with the performance of the function shall, unless the context otherwise requires, be construed accordingly.
(8) The Legislative Council may by resolution amend Part 2 of Schedule 2.
Section: 11 Heading: Directions to Commission Version Date: 23/06/2006
(1) After consultation with the chief executive officer of the Commission, the Chief Executive may, upon being satisfied that it is in the public interest to do so, give the Commission written directions as to the furtherance of any of its regulatory objectives or the performance of any of its functions. (Amended 15 of 2006 s. 2)
(2) The Commission shall comply with any written direction given under subsection (1).
(3) Where any written direction is given under subsection (1), any requirement under any other provision of this or any other Ordinance that the Commission shall, for the purpose of performing any of the functions to which the written direction relates-
(a) form any opinion;
(b) be satisfied as to any matter (including existence of particular circumstances); or
(c) consult any person,
shall not apply for all purposes connected with the performance of functions pursuant to, or consequent upon, the written direction.
(4) Written directions given under subsection (1) are not subsidiary legislation.
Section: 12 Heading: Commission to furnish information Version Date: 01/04/2003
The Commission shall, when required by the Financial Secretary, furnish to the Financial Secretary such information as he specifies on the principles, practices and policy it is pursuing or adopting, or proposes to pursue or adopt, in furthering any of its regulatory objectives or performing any of its functions, and the reasons therefor.
Section: 13 Heading: Financial year and estimates Version Date: 01/04/2003
Division 2-Accounting and financial arrangements
(1) The financial year of the Commission commences on 1 April in each year.
(2) The Commission shall, not later than 31 December in each financial year of the Commission, submit to the Chief Executive for his approval estimates of its income and expenditure for the next financial year.
(3) The Financial Secretary shall cause the estimates as approved pursuant to subsection (2) to be laid on the table of the Legislative Council.
Section: 14 Heading: Appropriation Version Date: 01/04/2003
For each financial year of the Commission, the Government shall pay to the Commission out of the general revenue the moneys appropriated by the Legislative Council for that purpose.
Section: 15 Heading: Accounts and annual report Version Date: 23/06/2006
(1) The Commission shall keep proper accounts and records of its transactions.
(2) The Commission shall, as soon as reasonably practicable after the end of each financial year of the Commission, prepare financial statements which shall-
(a) give a true and fair view of the state of affairs of the Commission as at the end of the financial year and of the results of its operations and cash flows in the financial year; and
(b) be signed by the chairman and the chief executive officer of the Commission. (Amended 15 of 2006 s. 3)
(3) The Commission shall, as soon as reasonably practicable after the end of each financial year of the Commission, prepare a report on its activities during the financial year and send a copy of the report to the Financial Secretary who shall cause a copy thereof to be laid on the table of the Legislative Council.
Section: 16 Heading: Auditors and audit Version Date: 01/04/2003
(1) The Commission shall, with the approval of the Financial Secretary, appoint auditors.
(2) The Commission shall, as soon as reasonably practicable after the end of each financial year of the Commission, submit to the auditors appointed under subsection (1) for audit the financial statements prepared for the financial year under section 15(2).
(3) The auditors appointed under subsection (1) shall prepare a report on the financial statements submitted to them under subsection (2) and send the report to the Commission which shall, as soon as reasonably practicable after its receipt, send to the Financial Secretary a copy of the report and a copy of the financial statements to which the report relates.
(4) The auditors appointed under subsection (1) shall include in their report a statement as to whether, in their opinion, the financial statements to which the report relates give a true and fair view of the state of affairs of the Commission as at the end of the financial year for which the financial statements are prepared and of the results of its operations and cash flows in the financial year.
(5) An auditor appointed under subsection (1) has a right of access at all reasonable times to the books, accounts, vouchers, records and documents kept by the Commission and is entitled to require from the officers of the Commission such information and explanations as he considers necessary for the performance of his duties as auditor.
(6) The Financial Secretary shall cause a copy of the report referred to in subsection (3), and a copy of the financial statements to which the report relates, to be laid on the table of the Legislative Council.
(7) The Director of Audit or another public officer authorized by the Director under subsection (8) may at any reasonable time-
(a) examine any books, accounts, vouchers, records or documents kept by the Commission; and
(b) if the Director or the public officer (as the case may be) considers appropriate, make a copy of the whole of, or any entry in, such books, accounts, vouchers, records or documents.
(8) The Director of Audit may authorize any public officer to perform any function for the purposes of subsection (7).
Section: 17 Heading: Investment of funds Version Date: 01/04/2003
The Commission may invest its funds which are not immediately required in the manner that the Financial Secretary approves.
Section: 18 Heading: Interpretation of Part III Version Date: 01/04/2003
PART III
EXCHANGE COMPANIES, CLEARING HOUSES, EXCHANGE
CONTROLLERS, INVESTOR COMPENSATION COMPANIES
AND AUTOMATED TRADING SERVICES
Division 1-Interpretation
(1) In this Part, unless the context otherwise requires-
"associated person" (相聯者), in relation to a person entitled to exercise, or control the exercise of, voting power in relation to, or holding securities in, a corporation-
(a) subject to paragraph (c), means any other person in respect of whom that first-mentioned person has an agreement or arrangement, whether oral or in writing, express or implied, with respect to the acquisition, holding or disposal of securities or other interests in that corporation or under which they act together in exercising their voting power in relation to it;
(b) subject to paragraph (c), includes, in relation to such provisions of Division 4 as are specified in Part 2 of Schedule 3, a person, or a person belonging to a class of persons, specified in that Part to be an associated person;
(c) excludes, in relation to such provisions of Division 4 as are specified in Part 3 of Schedule 3, a person, or a person belonging to a class of persons, specified in that Part not to be an associated person;
"controller" (控制人), in relation to a corporation, means any person who is-
(a) a shareholder controller of the corporation; or
(b) an indirect controller of the corporation;
"default proceedings" (違責處理程序) means any proceedings or other action taken by a recognized clearing house under its default rules;
"default rules" (違責處理規則), in relation to a recognized clearing house, means the rules of the clearing house required by section 40(2);
"defaulter" (違責者) means a clearing participant who is the subject of any default proceedings;
"indirect controller" (間接控制人), in relation to a corporation-
(a) subject to paragraph (b), means a person in accordance with whose directions or instructions the directors of the corporation or of another corporation of which it is a subsidiary are accustomed or obliged to act;
(b) excludes, in relation to such provisions of Division 4 as are specified in Part 4 of Schedule 3, a person, or a person belonging to a class of persons, specified in that Part not to be an indirect controller;
"market charge" (市場押記) means a charge, whether fixed or floating, granted in favour of a recognized clearing house-
(a) over any property which is held by or deposited with the clearing house; and
(b) for the purpose of securing liabilities arising directly in connection with the clearing house's ensuring the settlement of a market contract;
"market collateral" (市場抵押品) means any property which is held by or deposited with a recognized clearing house for the purpose of securing liabilities arising directly in connection with the clearing house's ensuring the settlement of a market contract;
"relevant corporation" (相關法團) means a corporation of which a relevant recognized exchange controller is a controller;
"relevant office-holder" (有關人員) means-
(a) the Official Receiver;
(b) a person acting in relation to a company as its liquidator, receiver or manager;
(c) a person acting in relation to an individual as his trustee in bankruptcy or interim receiver of his property; or
(d) a person appointed pursuant to an order for the administration in bankruptcy of an insolvent estate of a deceased person;
"relevant recognized exchange controller" (相關認可控制人) means a recognized exchange controller which is a controller of the Stock Exchange Company;
"settlement" (交收), in relation to a market contract, includes partial settlement;
"shareholder controller" (股東控制人), in relation to a corporation, means any person who, either alone or with any associated person or persons, is entitled to exercise, or control the exercise of, more than 35% of the voting power at any general meeting of the corporation or of another corporation of which it is a subsidiary.
(2) Where a charge is granted partly for the purpose specified in the definition of "market charge" in subsection (1) and partly for other purposes, the charge is in Division 3 a market charge in so far as it has effect for that specified purpose.
(3) Where any collateral is granted partly for the purpose specified in the definition of "market collateral" in subsection (1) and partly for other purposes, the collateral is in Division 3 market collateral in so far as it has been provided for that specified purpose.
(4) In Division 3, a reference to the law of insolvency includes a reference to every provision made by or under-
(a) the Bankruptcy Ordinance (Cap 6);
(b) the Companies Ordinance (Cap 32); and
(c) any other enactment which is concerned with or in any way related to the insolvency of a person.
(5) In Division 3, a reference to settlement in relation to a market contract is a reference to the discharge of the rights and liabilities of the parties to the contract, whether by performance, compromise or otherwise.
(6) Where there is a reference in this or any other Ordinance to a controller of a recognized exchange company or recognized clearing house (however expressed), the term controller shall be construed in accordance with the provisions of this section.
Section: 19 Heading: Recognition of exchange company Version Date: 01/04/2003
Division 2-Exchange companies
(1) No person shall-
(a) operate a stock market unless the person is-
(i) the Stock Exchange Company;
(ii) a recognized exchange company of which a relevant recognized exchange controller is a controller; or
(iii) a relevant recognized exchange controller which is itself a recognized exchange company;
(b) operate a futures market unless the person is a recognized exchange company;
(c) assist in the operation of a stock market which is operated in contravention of this subsection;
(d) assist in the operation of a futures market which is operated in contravention of this subsection.
(2) Where the Commission is satisfied that it is appropriate to do so-
(a) in the interest of the investing public or in the public interest; or
(b) for the proper regulation of markets in securities or futures contracts,
it may, after consultation with the public and then the Financial Secretary, by notice in writing served on a company, recognize the company as an exchange company-
(i) subject to such conditions as it considers appropriate specified in the notice; and
(ii) with effect from a date specified in the notice for the purpose.
(3) Without limiting the generality of conditions which may be specified in a notice under subsection (2), the Commission may, by notice in writing served on a recognized exchange company, amend or revoke any condition specified in the first-mentioned notice or impose new conditions, where the Commission-
(a) is satisfied that it is appropriate to do so on a ground specified in paragraph (a) or (b) of that subsection; and
(b) has consulted the Financial Secretary.
(4) Where the Commission amends or revokes any condition or imposes any new condition by a notice under subsection (3), the amendment, revocation or imposition takes effect at the time of service of the notice or at the time specified in the notice, whichever is the later.
(5) A person who, without reasonable excuse, contravenes subsection (1) commits an offence and is liable-
(a) on conviction on indictment to a fine of $1000000 and to imprisonment for 2 years; or
(b) on summary conviction to a fine at level 6 and to imprisonment for 6 months.
(6) Where a company becomes a recognized exchange company, the Commission shall cause notice of that fact to be published in the Gazette.
(7) Where a company is seeking to be a recognized exchange company and the Commission is minded not to recognize the company under subsection (2), the Commission shall give the company a reasonable opportunity of being heard before making a decision not to recognize the company.
(8) Where the Commission refuses to recognize a company as an exchange company under subsection (2), the Commission shall, by notice in writing served on the company, inform the company of the refusal and of the reasons for it.
(9) A person shall not be regarded as contravening-
(a) subsection (1)(b) by reason only of-
(i) carrying on a business of providing automated trading services that constitutes an operation of a futures market if-
(A) that person is authorized to provide the services under section 95(2) or is an intermediary licensed or registered for Type 7 regulated activity; and
(B) by virtue of the authorization, licence or registration, that person is permitted to engage in activities that constitute an operation of a futures market; or
(ii) carrying on a business of dealing in futures contracts that constitutes an operation of a futures market if-
(A) that person is an intermediary licensed or registered for Type 2 regulated activity; and
(B) by virtue of the licence or registration, that person is permitted to engage in activities that constitute an operation of a futures market; or
(b) subsection (1)(d) by reason only of assisting in carrying on a business of providing automated trading services that constitutes an operation of a futures market or carrying on a business of dealing in futures contracts that constitutes an operation of a futures market if the conditions referred to in paragraph (a)(i)(A) and (B) or (ii)(A) and (B) (as the case may be) are fulfilled in relation to the business of providing automated trading services or the business of dealing in futures contracts.
(10) In subsection (1), "stock market" (證券市場) shall have the meaning assigned to it in the definition of "stock market" in section 1 of Part 1 of Schedule 1, except that a reference to securities in that definition shall be construed as not including a reference to interests in any collective investment scheme.
Section: 20 Heading: Transactions that may be conducted on recognized stock market and recognized futures market Version Date: 01/04/2003
(1) No transaction may be conducted on a recognized stock market other than dealings in-
(a) securities; and
(b) other financial products which are approved by the Commission by notice published in the Gazette, either generally or in a particular case.
(2) No transaction may be conducted on a recognized futures market other than dealings in-
(a) futures contracts; and
(b) other financial products,
which are approved by the Commission by notice published in the Gazette, either generally or in a particular case.
(3) A notice under subsection (1) or (2) is not subsidiary legislation.
Section: 21 Heading: Duties of recognized exchange company Version Date: 01/04/2003
(1) It shall be the duty of a recognized exchange company to ensure-
(a) so far as reasonably practicable, an orderly, informed and fair market-
(i) in the case of a recognized exchange company which operates a stock market, in securities that are traded on that stock market or through the facilities of that company; or
(ii) in the case of a recognized exchange company which operates a futures market, in futures contracts that are traded on that futures market or through the facilities of that company; and
(b) that risks associated with its business and operations are managed prudently.
(2) In discharging its duty under subsection (1), a recognized exchange company shall-
(a) act in the interest of the public, having particular regard to the interest of the investing public; and
(b) ensure that the interest of the public prevails where it conflicts with the interest of the recognized exchange company.
(3) A recognized exchange company shall operate its facilities in accordance with the rules made under section 23 and approved under section 24.
(4) A recognized exchange company shall formulate and implement appropriate procedures for ensuring that its exchange participants comply with the rules of the company.
(5) A recognized exchange company shall immediately notify the Commission if it becomes aware-
(a) that any of its exchange participants is unable to comply with any rules of the company or any financial resources rules; or
(b) of a financial irregularity or other matter which in the opinion of the company may indicate that the financial standing or integrity of an exchange participant is in question, or that an exchange participant may not be able to meet his legal obligations.
(6) A recognized exchange company shall at all times provide and maintain-
(a) adequate and properly equipped premises;
(b) competent personnel; and
(c) automated systems with adequate capacity, facilities to meet contingencies or emergencies, security arrangements and technical support,
for the conduct of its business.
Section: 22 Heading: Immunity, etc. Version Date: 01/04/2003
(1) Without limiting the generality of section 380(1), no civil liability, whether arising in contract, tort, defamation, equity or otherwise, shall be incurred by-
(a) a recognized exchange company; or
(b) any person acting on behalf of a recognized exchange company, including-
(i) any member of the board of directors of the company; or
(ii) any member of any committee established by the company,
in respect of anything done or omitted to be done in good faith in the discharge or purported discharge of the duties of the company under section 21 or in the performance or purported performance of its functions under its rules.
(2) Where, in the discharge or purported discharge of its duties under section 63, a recognized exchange controller gives an instruction or direction or makes a request to a recognized exchange company of which it is a controller, the company's duties under section 21 or under its rules are not applicable to the company in respect of anything done or omitted to be done in good faith by the company in compliance with the instruction, direction or request.
Section: 23 Heading: Rules by recognized exchange company Version Date: 08/09/2004
(1) Without limiting any of its other powers to make rules, a recognized exchange company may make rules for such matters as are necessary or desirable-
(a) for the proper regulation and efficient operation of the market which it operates;
(b) for the proper regulation of its exchange participants and holders of trading rights;
(c) for the establishment and maintenance of compensation arrangements for the investing public.
(2) Without limiting the generality of subsection (1), a recognized exchange company which may operate a stock market may make rules for-
(a) applications for the listing of securities and the requirements to be met before securities may be listed;
(b) the entering into of agreements between the recognized exchange company and other persons in connection with the listing of securities, and the enforcement of those agreements by the company;
(c) the cancellation and withdrawal of the listing of, and the suspension and resumption of dealings in, securities listed on the recognized stock market operated by the recognized exchange company;
(d) the imposition on any person of obligations to observe specified standards of conduct or to perform, or refrain from performing, specified acts reasonably imposed in connection with the listing or continued listing of securities;
(e) the admission of securities which are regulated in a jurisdiction outside Hong Kong to trading on a recognized stock market operated by the recognized exchange company;
(f) the penalties or sanctions which may be imposed by the recognized exchange company for a breach of rules made under this section;
(g) procedures or conditions which may be imposed, or circumstances which are required to exist, in relation to matters which are provided for in the rules made under this section;
(h) dealing with possible conflicts of interest that might arise where a relevant corporation or a relevant recognized exchange controller seeks to be or is a listed corporation;
(i) such other matters as are necessary or desirable for the proper and efficient operation and management of the recognized exchange company.
(3) The Commission may, by notice in writing served on a recognized exchange company, request the company-
(a) to make rules specified in the request within the period specified in that request; or
(b) to amend rules referred to in the request in the manner and within the period specified in that request.
(4) Before making a request under subsection (3), the Commission shall consult the Financial Secretary and the recognized exchange company to which the request relates.
(5) Where the Commission is satisfied that a recognized exchange company has not complied with a request referred to in subsection (3) within the period specified in the request, the Commission may make or amend the rules specified in the request instead of the company.
(6) The following persons or anyone who seeks to become any such person shall, if required to do so by the rules of a recognized exchange company, make a statutory declaration concerning such matters as may be specified in the rules-
(a) an exchange participant or holder of trading rights of the company;
(b) a director of a corporation which uses the facilities of the company;
(c) a director of a corporation which is seeking to have any of its securities listed; and
(d) a director or adviser of a listed corporation.
(7) In making rules under this section, a recognized exchange company shall take into account that a solicitor or certified public accountant acting in his professional capacity in private practice has duties imposed by law and under rules of professional conduct. (Amended 23 of 2004 s. 56)
(8) A recognized exchange company shall, in circumstances stipulated in arrangements agreed from time to time between it and The Law Society of Hong Kong or the Hong Kong Institute of Certified Public Accountants, refer breaches of rules made under this section- (Amended 23 of 2004 s. 56)
(a) which are alleged to have been committed by a solicitor or certified public accountant in private practice; and (Amended 23 of 2004 s. 56)
(b) which may also constitute a breach of duty imposed by law or under rules of professional conduct,
to The Law Society of Hong Kong or the Hong Kong Institute of Certified Public Accountants (as the case may be), for determination of whether to make a finding, impose a penalty or sanction or take other disciplinary action. (Amended 23 of 2004 s. 56)
(9) For the purposes of subsections (7) and (8), a person shall be regarded as acting in the capacity of a solicitor or certified public accountant in private practice if in the course of private practice he provides legal or professional accountancy services to a client, but shall not be regarded as so acting where, in respect of a matter governed by rules made under this section, he is also connected with the matter in any other capacity. (Amended 23 of 2004 s. 56)
Section: 24 Heading: Approval of rules or amendments to rules of recognized exchange company Version Date: 01/04/2003
(1) Subject to subsection (7), no rule (whether or not made under section 23) of a recognized exchange company or any amendment thereto shall have effect unless it has the approval in writing of the Commission.
(2) A recognized exchange company shall submit or cause to be submitted to the Commission-
(a) for its approval the rules and every amendment thereto that require approval under subsection (1), together with explanations of their purpose and likely effect, including their effect on the investing public, in sufficient detail to enable the Commission to decide whether to approve them or refuse to approve them; and
(b) for its information the rules which belong to a class the subject of a declaration under subsection (7) and every amendment to the rules, as soon as reasonably practicable after they have been made.
(3) The Commission shall, not later than 6 weeks after the receipt of a submission under subsection (2)(a) from a recognized exchange company, by notice in writing served on the company, give its approval or refuse to give its approval (together with its reasons for the refusal) to the rules or amendment of the rules (as the case may be) or any part thereof, the subject of the submission.
(4) The Commission may give its approval under subsection (3) subject to requirements which shall be satisfied before the rules or amendment of the rules or any part thereof take effect.
(5) The Commission may in a particular case, with the agreement of the recognized exchange company concerned, extend the time prescribed in subsection (3).
(6) The Financial Secretary may, after consultation with the Commission and the recognized exchange company concerned, extend the time prescribed in subsection (3).
(7) The Commission may, by notice published in the Gazette, declare any class of rules of a recognized exchange company to be a class of rules which are not required to be approved under subsection (1) and, accordingly, any rules of the company which belong to that class (including any amendment thereto) shall have effect notwithstanding that they have not been so approved.
(8) Neither the rules under section 23 nor a notice under subsection (7) is subsidiary legislation.
Section: 25 Heading: Transfer and resumption of functions of Commission Version Date: 01/04/2003
(1) The Commission may request the Chief Executive in Council to transfer, by order ("transfer order") published in the Gazette, to a recognized exchange company ("designated exchange company")-
(a) a function to which this section applies; or
(b) that function in so far as it applies to the exchange participants or applicants to be exchange participants of the designated exchange company,
if the Commission is satisfied that the designated exchange company is willing and able to perform the function.
(2) This section applies to a function of the Commission under-
(a) Part V;
(b) section 145; and
(c) Parts II and XII of the Companies Ordinance (Cap 32).
(3) A function to which this section applies may be transferred by a transfer order either in whole or in part, and the transfer may be subject to-
(a) a reservation that the Commission is to perform the function concurrently with the designated exchange company; and
(b) such other conditions as the Commission considers appropriate.
(4) A transfer order may contain such incidental, supplemental and consequential provisions as may be necessary or expedient for the purpose of giving full effect to the order.
(5) The Commission shall not request that a transfer order be made in respect of the making of financial resources rules unless the proposed designated exchange company has first supplied the Commission with a draft of the financial resources rules which it proposes to make, and the Commission is satisfied that the rules, if made, will afford the investing public an adequate level of protection.
(6) The Commission may at the request or with the consent of a designated exchange company resume a function transferred by a transfer order, but the resumption takes effect only by order of the Chief Executive in Council.
(7) The Chief Executive in Council may order that the Commission resume a function transferred to a designated exchange company by a transfer order if the Commission so requests and if it appears to the Chief Executive in Council to be in the public interest to do so.
(8) A transfer order may provide for a designated exchange company to retain all or any of the fees payable in relation to the performance of a transferred function, and an order made under subsection (6) or (7) may provide for the Commission to retain all or any such fees, from a date specified in the order.
Section: 26 Heading: Appointment of chief executive of recognized exchange company requires approval of Commission Version Date: 01/04/2003
No appointment of a person as chief executive of a recognized exchange company shall have effect unless the appointment has the approval in writing of the Commission.
Section: 27 Heading: Production of records, etc. by recognized exchange company Version Date: 01/04/2003
(1) The Commission may, by notice in writing served on a recognized exchange company, require the company to provide to the Commission, within such period as the Commission may specify in the notice-
(a) such books and records kept by it in connection with or for the purposes of its business or in respect of any trading in securities or futures contracts; and
(b) such other information relating to its business or any trading in securities or futures contracts,
as the Commission may reasonably require for the performance of its functions.
(2) A recognized exchange company served with a notice under subsection (1) which, without reasonable excuse, fails to comply with the notice commits an offence and is liable on conviction to a fine at level 5.
