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HKEx Consults On Inside Information Disclosure

by Mary Swire,, Hong Kong

08 August 2012

The Stock Exchange of Hong Kong Limited, a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEx), has published a consultation paper to seek views on rule changes to complement the introduction of a statutory obligation to disclose price sensitive information (PSI).

The Securities and Futures (Amendment) Ordinance 2012, gazetted on May 4, 2012, implements a statutory obligation on listed corporations to disclose PSI - termed ‘inside information’ under the Securities and Futures Ordinance (SFO). The statutory disclosure regime will take effect from January 1, 2013.

Under the new PSI disclosure regime, listed corporations will be required to effect disclosure in a timely manner, backed by civil sanctions for non-disclosure. It is intended to help promote a continuous disclosure culture among listed corporations to enhance market transparency, and to bring the regulatory regime for listed corporations more in line with other international financial centres.

Under the new legislation, a listed corporation will be required to disclose price-sensitive information as soon as reasonably practicable after it has become aware of the data. An officer of the corporation will also be in breach if the corporation’s transgression is a result of his intentional, reckless or negligent conduct, or if he has not taken all reasonable measures to ensure that proper safeguards exist to prevent the breach.

However, the Stock Exchange still has a statutory obligation to maintain an orderly, informed and fair market for the trading of securities listed on it under the SFO; and, in connection with the implementation of the statutory disclosure regime, changes to the Listing Rules will be necessary to minimize duplication and overlap with the new law.

The main change to the Listing Rules will be to remove the existing continuing disclosure obligations which will become part of the statutory regime. In addition, a range of amendments will be made consequential on the removal of these core provisions.

"The proposed changes are to ensure that, amongst other things, the obligations in the Listing Rules do not duplicate the statutory disclosure obligation. The Stock Exchange will continue to monitor the market by making enquiries," said Mark Dickens, HKEx’s Head of Listing.

The deadline for replies to the consultation paper is October 3, 2012.

A comprehensive report in our Intelligence Report series giving a country-by-country analysis of offshore investment funds, stock exchanges and trusts, with an analysis of the US QI regime, is available in the Lowtax Library at and a description of the report can be seen at
TAGS: investment | law | financial services | equity investment | offshore | legislation | stock exchanges | Hong Kong | standards | regulation | services

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