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Hong Kong Debuts First Dual Counter Security

by Mary Swire, LawAndTax-News.com, Hong Kong

16 October 2012


Hong Kong Exchanges and Clearing Limited (HKEx) has welcomed the listing on October 12, 2012, of the first dual counter (DC) security, Harvest MSCI China A Index Exchange Traded Fund (Harvest ETF), on The Stock Exchange of Hong Kong Limited (the Exchange).

It was explained that a DC security offers two counters – for example, a renminbi (RMB) counter and a Hong Kong dollar (HKD) counter – for trading and settlement purposes. The two counters are of the same class, and holders of shares or units of the counters are treated equally. DC securities’ counters have different stock codes and stock short names for easy identification.

Investors can generally buy and sell shares or units in the same counter of a DC security. They can also buy shares or units of one counter and sell them in the other counter provided their brokers offer such service.

It was also pointed out that a major benefit of a DC security for investors is the convenience of being able to trade in either one of the two currencies, while the benefits for issuers include a wider base of potential investors. In addition, investors who want to trade in a DC security eligible for HKEx’s RMB Equity Trading Support Facility, such as the Harvest ETF, but do not have RMB, can use the facility.

"We are pleased to facilitate the launch of DC securities on the Exchange," said Calvin Tai, HKEx’s Head of Trading. "This is an important milestone in our RMB product development. Offering investors a choice of trading a security in RMB or HKD will further enhance HKEx’s position as a leading international market and Hong Kong’s increasingly important role as an offshore RMB centre."

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 http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report9.asp
TAGS: investment | capital markets | investment funds | offshore | stock exchanges | Hong Kong | currency

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