Hong Kong Exchanges and Clearing Limited Yearend Review

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• Hong Kong Exchanges and Clearing Limited
  Year-end Review
• 20 December 2001

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2001 Market Highlights

• (As of 14 December)
• Funds raised HK57.7 bil
• Main Board HK53.1 bil
• GEM HK4.6 bil
• Funds raised by IPOs HK23.8 bil
• Main Board HK20.5 bil
• GEM HK3.3 bil
• Funds raised in the secondary market HK33.9 bil
• Funds raised in H-shares and red-chips HK24.4
  bil
• markets
• New listings 80 (Main Board 30 GEM 50)
• Expected at year-end 89 (Main Board 31
  GEM 58)

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2001 Milestones
- Debut of HKEx quarterly newsletter Exchange
- Launched ORS and implemented new order types
and revised trading parameters for AMS/3 - Signed
MOU with the SFC on oversight, supervision of
Exchange Participants and market surveillance
- Commencement of trading of regional exchange
traded funds - Launched MSCI China Free Index
Futures contracts - New Main Board listing rules
requirement for website posting of listed
issuers' announcements together with issuance of
paid ad took effect - Hosted Asia-Pacific
regional meeting of ISSA in Hong Kong - Announced
the guidelines for issuers with negative or
negligible net tangible assets - Signed MOU with
Shanghai and Shenzhen stock exchanges on the
development of a China securities market
database - Signed MOU with the Stock Exchange of
Thailand on sharing of regulatory
information - Consulted market on derivative
warrants rules
- Announced the policy on granting waiver to
issuers for distributing two language versions of
annual and interim reports
- GEM Conference at Beijings Zhongguancun
Science Park
- Allowed Main Board companies with primary
listings and applicants to adopt International
Accounting Standards, and allowed Main Board
overseas-incorporated companies with secondary
listings and applicants to adopt US GAAP - GEM
Conference in Shanghai
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2001 Milestones
- Consulted market on extended trading hours
- Introduced Block Trading Facility - Launched
International Stock Futures and
Options - Received Asia Risk magazine award for
derivatives exchange of the year
- Tick rule exemption on index arbitrage and
market making transactions took effect - New
rules and market making mechanism for derivative
warrants took effect - Signed MOU with Kuala
Lumpur Stock Exchange on sharing of regulatory
information - Became the 1st HK listed company
assigned a corporate governance score
- Announced the introduction of index basket
order and pre-opening session
- Standardised stock futures and options contract
specifications and introduced more local stock
options - Joint announcement with the SFC on the
amendments to the GEM Listing Rules - GEM
Conference with Sichuan Provincial Government in
Chengdu
- Launched three-year EFN Futures
contracts - Launched China Stock Markets Web with
Shanghai and Shenzhen stock exchanges - Signed
MOU with Luxemburg Stock Exchange on sharing of
regulatory information - HKEx accredited by the
SFC to offer continuous professional training to
industry professionals - Hosted Futures Options
World Conference - GEM Conference in Chongqing
during Chongqing-Hong Kong week
- Migrated stock options trading to HKATS
- Launched remote trading access programme for
HKATS (GL Trade in August and Radianz in November)
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Looking AheadMarket Development

• Introduce pre-market opening and basket orders in
  Cash Market
• Introduce extended trading hours in Cash and
  Derivatives markets
• Launch remote trading access for Cash Market
• Review the current board lot system

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Looking AheadMarket Development (contd)

• Consult market on Listing Rules related to
  corporate governance
• Complete review of Main Board and GEM Listing
  Rules
• Evaluate dissemination arrangements for Main
  Board listed companies announcements
• Review delisting procedures

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Looking AheadMarket Development (contd)

• Evaluate operation of Phase 1 derivative warrants
  rule changes
• Review rules for listing of foreign issues
• Further roll-out Derivatives Markets Remote
  Trading Access programme
• Consolidation of clearing houses

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Looking AheadMarket Infrastructure

• Activate AMS/3 market making functions
• Implement scheduled upgrades and enhancements to
  HKATS
• Launch CCASS/3 and DCASS
• Launch e-Submission system
• Work towards scripless securities market

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Looking AheadProduct and Services

• Introduce more international and regional
  benchmark financial products
• Introduce Equity Linked Notes (ELN)
• Launch Brokers Electronic Support Services
  (BESS)
• Evaluate third party clearing for the cash market

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Looking AheadChina and International Development
Strategy

• Further develop ties with Mainland exchanges
• Further develop business network and continue
  promotional and educational activities on
  Mainland
• Further explore alliances with other exchanges

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Thank you