Jurisdiction - Hong Kong
Hong Kong – Regulatory Watch.

15 February, 2012


Legal News & Analysis – Asia Pacific – Hong Kong – Capital Markets


HKEx Consultation on ESG Reporting (December 9, 2011) (1)


The HKEx has published a consultation paper to seek views on its proposed Environmental, Social and Governance (“ESG”) Reporting Guide. The ESG Guide is divided into four areas: Workplace Quality, Environmental Protection, Operating Practices and Community Involvement. Each of the areas is divided into three sections: ESG aspects under each area, general disclosure recommendations, and key performance indicators. The ESG Guide will not be mandatory at this stage, but the level of obligation may be raised to “comply or explain” in the future. 

Companies Registry Consultation on Simplified Reporting (December 6, 2011) (2)
The Companies Registry has just published a consultation paper on the qualifying criteria for private companies to prepare simplified financial and directors’ reports. The Companies Registry is now seeking views on which of the options below should be adopted:
  • Option 1: Large private companies/groups should not be allowed to adopt simplified reporting (i.e., no change to the proposal in the Companies Bill)
  • Option 2: Allowing large private companies/groups with members’ approval to adopt simplified reporting
  • Option 3: Allowing large private companies/groups with members’ approval to adopt simplified reporting, subject to certain size criteria being met
SFC Consultation Financial Dispute Resolution Centre (November 8, 2011) (3)
The SFC proposed amendments to the Code of Conduct for persons licensed by or registered with the SFC in relation to the imminent establishment of the Financial Dispute Resolution Centre Ltd (“FDRC”). The FDRC will be responsible for administering the FSRC Scheme to handle monetary disputes of less than HK$500,000 (per case) between consumers and financial institutions by way of mediation or, failing at, arbitration.
SFC Consultation on Short Position Reporting Regime (October 18, 2011) (4)
The SFC has published consultation conclusions on the proposed short position reporting regime, and aims to implement them by March 31, 2012.  However, the SFC is further consulting the public whether the reporting should be on a net or gross basis. After taking market comments into consideration, SFC is proposing a net basis rather than a gross basis as originally proposed in the consultation paper (i.e., separate disclosure of long and short position in the same share).
Update: In February 2012, the SFC has just published the further consultation conclusions on the Securities and Futures (Short Position Reporting) Rules. The proposed Rules will now provide for reporting of short positions on a net basis. They also have been modified to provide greater clarity in certain areas, including reporting obligations in relation to corporate “umbrella” funds and jointly owned short positions.
Subject to the legislative process, the Rules will come into effect on 18 June 2012.
HKMA and SFC Joint Consultation on OTC Derivatives (October 17, 2011) (5)
The HKMA and SFC have been working on developing a regulatory regime for the OTC derivatives market, locally in accordance with commitments the G20 Leaders made in September 2009 to carry out reform by the end of 2012. 


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