The Securities and Futures Commission (“SFC”) proposes to expand the scope of short position reporting and the corresponding amendments to the Securities and Futures (Short Position Reporting) Rules (Cap.571AJ) (“SPR Rules”). A consultation paper on the above policy proposal was issued.
The proposed policy changes to the existing short position reporting regime are as follows:
(a) The SFC is proposing to extend short position reporting to all securities that are determined by The Stock Exchange of Hong Kong Limited to be “Designated Securities”;
(b) The reporting threshold trigger for Designated Securities that are collective investment schemes will be set only at the HK$30 million threshold;
(c) For the purposes of determining the value of a net short position and where applicable under the SPR Rules, if the closing price of a Designated Security is in a foreign currency, it must be converted into Hong Kong dollars at a specified rate of exchange for that foreign currency;
(d) In a contingency situation, daily reporting will apply to those Designated Securities determined by the SFC which the SFC will list out on a public notice; and
(e) The SFC may designate more than one electronic system for short position reporting.
The consultation paper contains proposed amendments to the SPR Rules to reflect the above proposals.
Overall, the Law Society considers that the SFC’s proposals are sensible, subject to few observations made in response to the questions set out therein.
The Law Society’s full submission can be found at http://www.hklawsoc.org.hk/pub_e/news/submissions/20151222b.pdf.