Source: http://www.hkex.com.hk/eng/market/sec_tradinfra/rmbequity/faqrmbequity.htm
Timestamp: 2017-10-19 18:22:20
Document Index: 352975411

Matched Legal Cases: ['art 1', 'art 2', 'art 3', 'art 4', 'art 5', 'art 6', 'art 1', 'art 2', 'art 3', 'art 4', 'art 5', 'art 6']

Hong Kong Exchanges and Clearing Limited > Home > Market Operations > Securities Trading Infrastructure > RMB Products Issuance, Trading and Clearing > Frequently Asked Questions
Part 1: General Questions For Issuers
Part 2: RMB IPO Models
"Single Counter" Model
Part 3: RMB Follow-on Offerings Model
RMB ETFs (updated on 5 October 2012)
Part 4: RMB ETFs
RMB and HKD Dual-Counters
Part 5: Dual-Counters Related Questions
(Applicable to equities and ETFs unless specified otherwise)
Clearing and Settlement Arrangement
Transfer Arrangement (CCASS and Share Registrar)
Dual Counter model for HKD-denominated ETFs
Part 6: Fees and Other Transaction Costs
Part 1. General Questions For Issuers
Will the issuer automatically be able to remit the RMB proceeds raised from a RMB IPO or a RMB follow-on offering to the Mainland?
Regardless of the currency involved, if an issuer wishes to remit RMB proceeds to the Mainland, it will have to obtain all necessary approvals from the relevant Mainland authorities. The procedure should be similar to the existing arrangement for remitting funds raised in Hong Kong back to the Mainland.
If an issuer decides to raise funds through a RMB IPO or a RMB follow-on offering, will it result in additional delays in the review process by the Listing Division?
There should not be any delays in the listing review process as all IPOs and follow-on offering will be subject to the same process regardless of the currency of the funds that they are raising. However, since we are in the early stage of the development of RMB products on the HKEx platform, there may be additional disclosure requirements and mechanics in relation to a RMB IPO or a RMB follow-on offering. We will dedicate necessary resources to work closely with all prospective and existing issuers seeking a RMB IPO or a RMB follow-on offering to prevent unnecessary delays in the process.
Will issuers who raise funds through RMB IPOs or RMB follow-on offerings be subject to additional HKEx compliance rules?
At the moment, we do not see the need for any additional compliance rules for issuers of RMB IPOs other than what are currently in the Listing Rules. We will review such need from time to time and as the situation may require as the RMB equity market in Hong Kong develops.
Does an issuer need approval to remit the RMB proceeds to the Mainland at the time of A1 filing, Listing Committee Hearing or listing?
There is no HKEx Listing Rule requirement to obtain prior approval, but any remittance of funds into the Mainland will require the necessary approvals (see relevant question above).
Will there be a minimum market capitalization requirement for a RMB IPO or a RMB follow-on offering?
For RMB IPO, given transferability, the HKD and RMB tranches need to meet the minimum market capitalisation requirement under the Listing Rules on an aggregate basis at the time of listing.
For RMB follow-on offering, given transferability, there is no specific requirement, but we expect a meaningful offer size and an adequate spread of shareholders for the RMB counter to support secondary market liquidity.
Part 2. RMB IPO Models
(2.1, 2.2, 2.3, 2.4 are posted on 13 April 2012)
What is a Single Tranche, Single Counter RMB IPO?
A Single Tranche, Single Counter RMB IPO is a model whereby investors subscribe to the IPO shares with RMB only. Upon listing, all shares will be traded in RMB. The Hui Xian REIT IPO is an example using the Single Tranche, Single Counter model.
2.2 What is a Dual Tranche, Single Counter RMB IPO?
Under a Dual Tranche, Single Counter RMB IPO, an issuer provides investors with currency options to subscribe its shares in either (a) all in RMB; (b) all in HKD; or (c) partly in RMB and partly in HKD. Generally, the issuer will request and the Exchange will grant rule exemption on multiple applications as long as only one application is made to the RMB tranche and one in the HKD tranche per subscriber. Upon listing, all shares will be traded in RMB only.
If an issuer is to provide a HKD subscription option to investors, the prospectus should clearly disclose the detailed subscription mechanism, including in particular the HKD/RMB conversion mechanism and associated costs and risks to the investors.
2.3 How can an investor subscribe IPO shares partly in RMB and partly in HKD under a Dual Tranche, Single Counter RMB IPO?
Similar to the existing HKD IPO, investors can subscribe IPO shares in HKD and/or RMB through one of the following channels: (a) paper application forms; (b) CCASS EIPO directly or via a broker or custodian; or (c) white form EIPO.
If applications are made through CCASS and are partly in HKD and partly in RMB, two separate electronic application instructions will need to be submitted, one for RMB subscription and the other one for HKD subscription.
2.4 How does CCASS EIPO work under a Dual Tranche, Single Counter RMB IPO?
CCASS will set up two separate EIPO announcements, one for RMB subscriptions under the issuer’s stock code and the other one for HKD subscriptions under a temporary dummy stock code assigned by CCASS purely for CCASS EIPO purposes.
The two EIPO announcements will then be processed separately. In other words, two separate upload files, allotment reports and holdings for allotted shares will be required/generated/credited under each EIPO announcement and separate electronic payment instructions will be generated under each EIPO announcement for payment and refund of subscription monies. Before listing, the holding under the temporary dummy stock code will be converted to the issuer’s stock code so that upon listing all the holdings for allotted shares under the two EIPO announcements will be reflected under the issuer’s stock code.
What is a Dual Tranche, Dual Counter RMB IPO?
A Dual Tranche, Dual Counter RMB IPO is the simultaneous offering and initial listing of a tranche of RMB-traded shares and a tranche of HKD-traded shares by the same issuer. All shares from the two tranches are of the same class and all shareholders are treated equally. Upon listing, shares of the two tranches will be traded under two separate counters on the HKEx in their respective currencies (ie one in RMB and one in HKD). The trades of the respective counters will be cleared and settled separately under CCASS, HKEx’s Central Clearing and Settlement System for securities. The Dual Tranche, Dual Counter model may entail a mechanism whereby a shareholder may transfer his/her shares from one tranche to the other through the share registrar. The concept is similar to dually-listed companies whose shares may be traded in different currencies in different markets, except that the Dual Tranche, Dual Counter model will work in the same market. The above describes how a possible Dual Tranche, Dual Counter model would work. HKEx retains flexibility for other possible IPO models.
Under the Dual Tranche, Dual Counter model, what is the allocation mechanism between the RMB and HKD tranches before pricing?
We expect the two tranches will work in largely the same way as two parallel IPOs except that the upfront allocation of shares between the two tranches will have to be clearly disclosed in the prospectus; and the offer price of the two tranches should be the same (subject only to HKD/RMB conversion), etc. The prospectus will also need to fully disclose the claw-back and re-allocation mechanisms and that they function independently within the tranche. Having satisfied the intra-tranche claw-back/re-allocation requirements, the issuer may re-allocate shares between the two tranches in the light of market demand.
Should RMB and HKD tranches be priced at the same level?
See answer to the question above. The offer price of the two tranches should be the same after foreign exchange conversion. The FX rate or the mechanism for the determination of the FX rate to be used for the purpose of calculating the final offer price should be clearly disclosed in the prospectus.
How will underwriters' stabilisation work after a Dual Tranche, Dual Counter IPO?
Given transferability, the existing "Greenshoe" mechanism (ie the over-allotment option) will apply to both two tranches in aggregate 15% on the basis of pre-determined offer size.
Will a RMB tranche of shares require an additional intermediary like an HDR does?
In general, we do not see the need for any additional intermediaries for a RMB IPO other than what is required under the Listing Rules for the issuance of shares. Any new requirements will be considered in more detail on the circumstances and merits of individual cases.
Part 3. RMB Follow-on Offerings Model
What are the methods of an RMB follow-on offering?
A listed issuer can choose to raise funds in RMB via placement, rights issue/open offer, public offer, or a combination of the above, which is similar to existing fund raising methods allowed under the Listing Rules. The RMB follow-on offering will lead to a new counter of RMB-traded shares of the same issuer on the Stock Exchange alongside the HKD counter. While the new shares subscribed in RMB will be traded in the RMB counter, the existing HKD-traded shares will continue to be traded in the existing HKD counter.
Will the RMB follow-on offering process be more complex than the existing mechanism?
The process for a RMB follow-on offering should be similar to the existing follow-on offering process in other currency. Existing disclosure requirements per Listing Rules and Company Ordinance shall continue to apply. There should be additional disclosure on the establishment of dual trading counters and related arrangements for corporate actions such as dividend payments and currency options.
Can a listed issuer launch a new RMB counter without making a RMB follow-on offering?
We retain flexibility for other possible means to issue RMB-traded shares, but there should be a reasonable supply of RMB-traded shares to support the secondary market liquidity.
Can a listed issuer raise funds in RMB without launching a new RMB counter?
Yes, the existing Listing Rules permits secondary fund raising in currency other than HKD, including RMB. Shares resulting from such secondary fund raising may be traded in the HKD counter, provided there is sufficient disclosure to the market.
Part 4. RMB ETFs
RMB and HKD Dual Counters
Part 5. Dual-Counters Related Questions
Will HKD-traded securities and RMB-traded securities be transferable?
Will dual-counter with transferability breach the RMB20K conversion limit for banks with individual customers?
How will the market cap of the issuer be calculated?
Will dividends be paid in HKD or RMB?
Can a listed issuer remove one of the counters?
Will the ownership disclosure requirement apply on a combined basis? (applicable to equities)
If a listed issuer issues new shares under a general mandate after the launch of a RMB counter, how will the mandate limit and benchmark price be determined? (applicable to equities)
The list of ISINs is published on the HKEx website (http://www.hkex.com.hk/eng/market/sec_tradinfo/isincode/isincode.htm).
The list of Designated Securities eligible for short selling is published on the HKEx website (http://www.hkex.com.hk/eng/market/sec_tradinfo/CMTradInfo.htm).
How will the individual turnover of the two stock counters be calculated and displayed in the Automatic Order Matching and Execution System (AMS)? How about the overall market turnover?
For calculation and display of overall market turnover, turnover of trades conducted in different trading currencies will be converted into the HKD equivalent, aggregated and displayed in AMS.
AMS will apply checking at the order level, irrespective of the stock counter.
5.31 What is the currency used for the creation and redemption of new units of HKD-denominated ETFs? Is the Dual Counter model adopted for primary market or secondary trading? Can newly issued units from creation in the primary market be designated in the RMB counter immediately upon issuance?
5.32 Payment of dividends in HKD/RMB and guidance to Managers
5.33 How will the last closing net asset value (NAV) per unit and near real time estimated NAV (iNAV) per unit of a HKD-denominated ETF with a RMB-counter be calculated?
5.34 Must there be a Securities Market Maker (SMM) for each ETF counter?
5.35 Will the Trading Support Facility support the trading of the RMB counter of ETFs with dual counters?
5.36 Are there other relevant reference materials on the operation of the Dual Counter model to ETFs and additional guidance for ETF Market Participants?
Part 6. Fees and Other Transaction Costs