A. FAQs on the product scope of HKIDR

Q1 :

For fixed income/bond instruments (e.g. debt securities under Chapter 37 of the Listing Rules of SEHK) that are listed on SEHK but are not traded on SEHK’s trading system (i.e. trading purely over-the-counter between counterparties) and are not reportable by EPs to SEHK pursuant to its rules, are they in scope for BCAN tagging under the HKIDR?

A:

HKIDR applies to on-exchange orders, and off-exchange orders and off-exchange trades reportable to SEHK under the SEHK rules in securities listed or traded on SEHK’s trading system (except for odd lots traded on SEHK’s odd lot/special lot market and transactions reported via SEHK’s trade amendment system). Therefore, a fixed income/bond instrument that is traded off-exchange but is not reportable to SEHK under its rules is not subject to the HKIDR requirements.

Q2 : Are primary market creation and redemption orders submitted by participating dealers (by instruction from their clients) in respect of exchange-traded funds (“ETF”) subject to the HKIDR and the OTCR?

A: The HKIDR applies to the trading level for the securities market in Hong Kong. As opposed to secondary market trading of ETF, primary market creation and redemption orders for ETF generally involves creation and redemption processes but not trading of ETF on SEHK. Therefore, these orders are out of scope of the HKIDR in general. Also, transfers of a basket of securities for allotment or redemption of an ETF with stamp duty remission from the Inland Revenue Department of Hong Kong are not reportable under the OTCR. Please refer to paragraphs 187-190 of the Consultation Conclusions.

Last update: 21 Jan 2022

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