Entire Section

  • Terms and Conditions

    • 15A.36

      (1) Structured products listed or to be listed on the Exchange shall be subject to the terms and conditions approved by the Exchange. Modifications to terms and conditions must be approved by the Exchange. The terms and conditions set out herein are not exhaustive. The Exchange's requirements in respect of minimum issue price and minimum period between listing and expiry or maturity are modified in the case of Emulation Issues.
      (2) An Emulation Issue is a structured product whose underlying asset and type (e.g. put or call) are identical to an existing structured product (the "emulated issue") that is al listed on the Exchange at the time the Emulation Issue is launched. The expiry or maturity date of the Emulation Issue may be up to five business days before or after that of the emulated issue. Where the underlying asset of the Emulation Issue is a security listed on the Exchange (or listed on another exchange) the exercise or strike price of the Emulation Issue may differ by no more than one spread in the underlying security from that of the emulated issue or by no more than 0.5% in other cases.

    • 15A.37

      The structured products for which listing is sought must be freely transferable.

    • 15A.38

      (1) Derivative warrants must normally expire or mature not less than 6 months from the date of listing. Emulation Issues (as defined in rule 15A.36(2)) must normally expire or mature not less than three months from the date of listing.
      (2) Equity Linked Instruments must normally expire or mature not less than 28 days from the date of listing and not more than two years from the date of listing.
      (3) For other structured products the minimum period between the date of listing and the expiry or maturity date shall be as agreed by the Exchange.
      (4) The requirements in relation to the minimum period between date of listing and expiry or maturity date do not apply to Further Issues (as defined in rule 15A.52).
      (5) Structured products (except Equity Linked Instruments) shall expire or mature no more than five years from the date of listing.

      Note: For structured products relating to the same underlying securities listed on the Exchange, the Exchange may limit the number of such products which expire or mature on any one day.

    • 15A.39

      The expected market capitalization of a structured product issue must normally be at least HK$10 million.

    • 15A.40

      Structured products relating to shares (or other securities) shall normally be issued in the ratio of one, five, ten, 50, 100 or 500 structured products for one share (or other security); or one structured product for one, ten or 100 shares (or other security). The Exchange may permit other ratios, where the number of structured products for one share (or other security), or the number of shares (or other security) for one structured product is an integral power of ten, for structured products other than derivative warrants.

    • 15A.41

      When the underlying securities of a structured product (excluding baskets ) are normally traded in board lots, the board lots of the structured product at the time of listing shall be such that on exercise or maturity of one board lot of the structured product, the holder of that structured product is entitled to a whole number of board lots of the underlying securities. Structured products that provide for settlement wholly in cash may be issued such that one board lot of the structured product on exercise or maturity entitles the holder to one tenth of a board lot of the underlying security.

    • 15A.42

      The trading board lot of structured products relating to index, currency or a basket of shares must be 10,000.

    • 15A.43

      The minimum issue price of a structured product must be not less than HK$0.25. The minimum issue price does not apply to the following:-

      (1) Further Issues (as defined in rule 15A.52).
      (2) Emulation Issues (as defined in rule 15A.36(2)) which are subject to a minimum issue price of HK$0.15.

    • 15A.44

      (1) The issuer must, at the time of launch, specify the settlement method of the structured product upon exercise or maturity.
      (2) Options for the issuer to elect for settlement either in shares or cash, upon exercise (or maturity) of the structured product will not be acceptable.
      (3) Options for the holder of an Equity Linked Instrument to elect for settlement in either shares or cash on maturity will not be acceptable.

      Note: The terms and conditions for Equity Linked Instruments must provide that if the Equity Linked Instrument provides for settlement in shares the holder on maturity shall receive a cash amount from the issuer in relation to any number of underlying shares which is less than one board lot. The terms and conditions of other structured products that provide for settlement by delivery of shares may provide that the holder, upon exercise (or maturity) of the structured product, shall receive a cash amount from the issuer in relation to any number of underlying shares which is less than a board lot. In all cases the cash amount shall be delivered as soon as practicable.

    • 15A.45

      A structured product relating to securities not listed on the Exchange must be settled wholly in cash. Where the structured product is traded on the Exchange in Hong Kong dollars, settlement shall be in Hong Kong dollars.

    • 15A.46

      In relation to structured products which are, or which may be, settled by delivery of the underlying securities or assets the terms and conditions must:-

      (1) where the issuer transfers the underlying securities or assets to the holder of the structured product, treat the holder as the beneficial owner of the underlying securities or assets and entitled to all rights, enjoyment, entitlement and benefit in respect thereof which exists as at or which arises as from the date such holder pays the exercise price, if any, and the delivery expenses, if any, (including any stamp duty on the transfer of securities) in accordance with the terms and conditions; and
      (2) where the holder transfers the underlying securities or assets to the issuer, treat the issuer as the beneficial owner of the underlying securities or assets and entitled to all rights, enjoyment, entitlement and benefit in respect thereof which exists as at or arises as from the date the issuer pays to a holder the cash settlement amount; and
      (3) provide for either settlement by physical delivery of documents of title (including certificates in the name of the holder or its nominee) to the holder (or its nominee) or settlement by way of electronic transfer through CCASS within such period following a valid exercise as shall be agreed to by the Exchange.

    • 15A.47

      In relation to structured products over securities or assets which are to be settled wholly in cash:-

      (1) where there is only one Valuation Point (see rule 15A.05(3)) the valuation method for determining the amount of the cash settlement on expiry or maturity shall be:-
      (a) in the case of derivative warrants relating to securities listed on the Exchange, the average of the closing prices of the underlying securities (as derived from the Daily Quotation Sheet of the Exchange, subject to any adjustments as may be necessary to such closing prices to reflect any capitalisation, rights issue, distribution or the like) for the 5 business days prior to and up to and including the business day before the expiry or maturity date;
      (b) in the case of other structured products or where the structured product relates to securities which are not listed on the Exchange or to other assets, such formula as shall be permitted by the Exchange from time to time; and
      (2) Where there are two or more Valuation Points the valuation method for determining the amount of the cash settlement on expiry or maturity shall be such formula as shall be permitted by the Exchange;
      (3) Where a structured product is exercised prior to maturity or expiry the valuation method for determining the cash settlement amount shall be:
      (a) in the case of structured products relating to securities listed on the Exchange, the closing price of the underlying security (as derived from the Daily Quotation Sheet of the Exchange) on the day that the structured product is exercised, provided that the product is exercised before the earlier of the commencement of the morning trading session or any pre-opening session on that day. If the product is exercised after such time, the closing price (as derived from the Daily Quotation Sheet of the Exchange) on the day following the day that the structured product is exercised shall be used;
      (b) in the case of other structured products such method as shall be permitted by the Exchange;
      (4) the net cash settlement to be paid to the holder within such period following a valid exercise as shall be agreed to by the Exchange. An exercising holder shall not be required to deliver the exercise money at the time of exercise; and
      (5) the terms and conditions must provide for automatic settlement on expiry or maturity (i.e., so that holders are not required to serve a notice of exercise) if the structured products are "in the money" at expiry or maturity.