Entire Section

  • Collateralised Structured Products

    • 15A.48

      In addition to the other requirements which apply generally to structured products, an issuer of collateralised structured products must:-

      (1)    demonstrate that the proposed security arrangements are for the benefit of and adequately protect the interests of holders of the structured product. In particular, the underlying securities or assets (or rights to acquire the underlying securities or assets) must normally be held as security for the performance of the issuer's obligations under the collateralised structured product by an independent trustee, custodian or depositary for the benefit of holders of the structured product;
       
      (2) grant a charge over such securities or assets in favour of an independent trustee, custodian or depositary on behalf of holders of the structured product to secure the issuer's obligations to deliver such securities or assets upon valid exercise of the collateralised structured products ;
       
      (3) deposit such securities or assets with the trustee, custodian or depositary in order to secure performance by the issuer of such obligations and authorise the trustee, custodian or depositary to deliver the underlying securities or assets to holders of the structured product upon valid exercise of the collateralised structured product in the event that the issuer is unable to discharge its obligations under the collateralised structured products ; and
       
      (4) provide a warranty to the trustee, custodian or depositary for the benefit of holders of the structured product that the underlying securities or assets are unencumbered, that the securities or assets are being held by the trustee, custodian or depositary for the benefit of holders of the structured product and that the issuer will, upon a valid exercise, be able to convey to holders of the structured product good title to the underlying securities or assets free from all claims, charges, encumbrances, liens, equities and other third party rights whatsoever.

    • 15A.49

      For the purposes of rule 15A.48 the Exchange will normally require the trustee, custodian or depositary to be:-

      (1) a bank licensed under section 16 of the Banking Ordinance;
      (2) a trust company which is a subsidiary of such a bank;
      (3) a trust company registered under Part VIII of the Trustee Ordinance; or
      (4) a banking institution or trust company incorporated outside Hong Kong which is acceptable to the Exchange.

      However, the Exchange may in exceptional cases accept an alternative person to be trustee, custodian or depositary.

    • 15A.50

      In the case of an issue of collateralised structured products, the issuer must submit to the Exchange legal opinions upon the legally binding effect and enforceability of the proposed trust or other security arrangements.