ENG-2007 — Page 117

Financial and Monetary Affairs | 77

The MMT inquires into market misconduct that occurred on or after April 1, 2003. The Insider Dealing Tribunal continues to inquire into cases of insider dealing that occurred before April 1, 2003.

As an alternative to civil proceedings, market misconduct is subject to criminal prosecution, which, if successful, may result in more severe penalties on conviction, including up to 10 years' imprisonment or a fine of up to $10 million.

The MMT took up its first case in September 2007. By year-end, the Financial Secretary had referred three cases to the MMT.

Recent Developments

Apart from reinforcing its status as the premier capital formation centre for Mainland enterprises, Hong Kong encourages and facilitates the listing of more quality overseas companies in the HKSAR. HKEX and the SFC have published a joint policy statement to clarify requirements in the Listing Rules governing the listing of overseas companies and setting out the shareholder protection measures that overseas applicants should address in seeking a listing in Hong Kong.

The SFC and HKEx also published a joint policy statement in November 2007 on a pilot scheme for the posting, by a new listing applicant prior to its issue of a listing document, of a web proof information pack (WPIP) on the HKEX or GEM website (HKEX Website). A WPIP, in the nature of a near-final draft listing document with the omission of pricing and offer size information, should be submitted to SEHK for posting on the HKEX Website no later than the time when information about the listing applicant is first provided to institutional investors.

The rationale for the WPIP-posting requirement is to address the apparent inequality of information dissemination between institutional and retail investors in an initial public offering such that retail investors could access information about a listing applicant at an earlier stage in the listing process. It will also help ensure a more level playing field among all investors, bring the IPO regime in Hong Kong more in line with other leading international jurisdictions and assist in reducing media speculation or market rumours.

The pilot scheme will go into effect on January 1, 2008. The SFC and HKEX will commence reviewing the operation of the pilot scheme in April 2008 and assuming no major defect is identified, the WPIP-posting requirement will be codified into the Listing Rules.

To further facilitate the processing of UCITS III funds, the SFC introduced in March 2007 a series of streamlined measures for the authorisation of UCITS III funds with special features, such as index funds, guaranteed funds, fund of funds, money market funds. By year-end, there were 1 419 SFC-authorised UCITS III funds, representing 70 per cent of all unit trusts and mutual funds authorised by the SFC.

The SFC approved HKEx's proposal to increase the position limits on stock options contracts in October 2005. The increased limit took effect on February 10, 2006 after completion of legislative amendments.