78 Financial and Monetary Affairs
To meet market needs and promote growth in the futures and options market, the SFC adjusted in March 2007 the position limits of Hang Seng China Enterprises Index (H-shares Index) futures and options contracts from 6 000 contracts per futures contract month/options series to an aggregate delta limit of 12 000 applicable to all futures months and options series.
In May 2007, the SFC consulted the public on the proposal to amend the Securities and Futures (Contracts Limits and Reportable Positions) Rules to empower the SFC to authorise Exchange Participants or their affiliates to exceed the position limits (by up to 50 per cent) for Hang Seng Index futures and options contracts as well as H-shares Index futures and options contracts where the limits are not enough. to enable them to serve their clients' needs. The amended rules became effective on December 21, 2007.
In November 2007, the SFC approved HKEx's rule amendments to facilitate the introduction of Third Party Clearing (TPC) to the cash market which allows a Stock Exchange Participant to give up its clearing and settlement obligations with HKEx to another clearing participant. This provides an option to Exchange Participants to minimise its back office operations and concentrate on its core business.
The SFC also approved HKEx's proposal for the issuance of new trading rights in the stock and derivatives markets. Under the new arrangement, the exchanges may issue a new trading right at $500,000 if a new exchange participant cannot purchase a trading right from existing holders during a tender process. The new procedures became effective on March 7, 2007.
Pursuant to a review of the derivative warrants market by the SFC, a six-point plan to improve market operations was proposed in March 2006. As at end-2007, most of the proposals under the six-point plan, which include issuing new marketing guidelines, requiring the use of plain language for listing documents, facilitating further and identical issues, banning commission rebates and other incentive schemes offered by issuers, and enhancing investor education and information dissemination, have been implemented. The SFC is working with HKEx on the remaining proposal to tighten liquidity-providing provisions.
The new sponsor regime and the Guidelines on Sponsors and Compliance Advisers came into effect on January 1, 2007. Only those intermediaries that had met the stringent eligibility requirements were allowed to continue their sponsor or compliance adviser work. As at year-end, 189 of the 267 intermediaries licensed or registered for Type 6 regulated activity had been subjected to licensing conditions. restricting them from acting as sponsors or compliance advisers.
In November 2007, the SFC issued a consultation paper proposing to require all licensed corporations to submit their financial returns electronically. Electronic submission is beneficial to both the industry and the SFC as it facilitates efficient handling by minimising manual errors in the current data collection process and allowing straight through processing. This move to e-submission is in line with the