1、,Teachers Workshop - 2004 Stock Module Elementary,Securities and Futures Commission,XYZ Company,2,Overview of Stocks,Definition A certificate representing a unit of ownership in a companyClassification : Ordinary vs. Preferred Blue Chips H share , Red Chips,3,Role of a Stock Exchange,Stock Exchange,
2、Companies,Go public A venue for raising funds PRIMARY MARKET,An open and public market for exchanging stocks SECONDARY MARKET,Investors,4,Overview of the HK Stock Market,No. of listed companies as at Nov 04: Main Board 882 Growth Enterprise Market (GEM) 203 As of Sep 04, total market capitalisation:
3、 HK$5,960.6B(Rank: 8th in the world, 2nd in Asia) Average daily turnover in 04: HK$15.7B According to SFC Retail Investor Survey 2003, 1.3M or 23.8% of HK adults aged 18 or above had invested in HK stocks during the last 2 years,5,Stock Market Primary Market,There are two markets on the SEHKNew alte
4、rnative listing criteria for Main Board companies,6,Stock Market Primary Market,Roles of financial institutions Sponsors UnderwritersHow does a company go public? The most common way - Initial Public Offering (IPO) Public subscription Placing Public subscription + Placing,7,IPO Prospectus,Provides d
5、etailed information about thenewly listed company Summary Timetable Overview of the industry Business Future plans and prospects Management details Risk factors Financial information Use of proceeds,8,IPO Subscription,Investors How to subscribe for IPO shares? White vs. Yellow vs. Pink application f
6、ormsEIPONo multiple applications,9,IPO - Subscription,10,IPO Share Allotment,Clawback mechanism for IPO of Main Board companies with both placing and public subscription tranches:Check allotment results: Main Board : Newspapers and HKEx website GEM : GEM website,11,IPO Distribution of Shares & Refun
7、d Cheques,12,IPO Distribution of Shares & Refund Cheques,Special arrangements to allow collection of share certificates and/or refund cheques in personRefund cheques printed with part of the applicants ID card numbers,13,IPO Mind the Risks,If the IPO is over-subscribed, no shares may be allotted or
8、you will only receive partial allotment of your application Subscription on margin involves costs - profits may not offset the costs Dont assume that the share price must rise above the offer price on the 1st trading day Mind the mailing risk and delay in receiving share certificates Some intermedia
9、ries will only sell your share certificate after confirming its authenticity,14,SEHK,HKSCC,Investors,Order confirmation & settlement,Order execution,Trade data,Custody, clearing & settlement,Stock brokers (Exchange Participants),Stock Market Secondary Market,Investor Participant Account (Optional),S
10、tock brokers (Non- Exchange Participants),Order routing,15,Secondary Market SEHK,Operates the trading system AMS/3 Automatic order matchingAdministers the Trading Rules and monitors compliance by its ParticipantsDisseminates stock market information to the market via information vendors,16,Hong Kong
11、 Securities Clearing Company Limited,Clearing and settlement via CCASS under an immobilised modeSettlement cycle : T+2 at brokerage level,17,Hong Kong Securities Clearing Company Limited,Investor Participant Account : a stock custody account for investors with enhanced featuresMoving towards scriple
12、ss trading : Investors can choose to hold or “dematerialise” their scrips Register of Members Certificated /Uncertificated shareholders Progressive implementation,18,Stockbrokers,The “intermediation” role Must be licensed by SFC Regulated Activity (RA) 1 Dealing in Securities RA4 Advising on securit
13、ies RA8 Securities margin financing An SFC licence is not a guarantee of future performance or quality of service Beware of “boiler-room” operators,19,Listed Companies,Comply with the Listing Rules On-going disclosure obligations Price-sensitive information Financial information Annual, interim, qua
14、rterly (only for GEM companies) reportsFailure to publish these reports on time will be subject to suspension Corporate actions “Notifiable” transactions,20,Listed Companies: Corporate Governance,New Listing Rules to enhance corporate governance Directors and board practice Notifiable and connected
15、transactions Financial reporting and disclosure obligation Enhanced voting powers of shareholders,21,Maintain the share register of a listed company Help a listed company issue share certificates, distribute dividends and corporate documents to shareholders, etc,Listed Companies,Investors,Share Regi
16、strars (股份過戶處),22,Be a Smart Stock Investor,Find the right stockbroker Know both your rights and obligations in dealings Bank on facts, not rumours Know your rights as a shareholder Understand the risks of stock trading,23,Know Your Investments,Read the prospectus before you subscribe for a new stoc
17、k Read annual reports, shareholder circulars and company announcements to keep yourself up-to-date of the companys developments Dont chase rumours Herd investing is not smart investing,24,Your Rights as a Shareholder,Information rights Voting rights Pre-emptive rights Rights issues Entitlements Divi
18、dends (cash / scrip), bonus shares, subscription warrants,25,Obligations of “Certain” Shareholders,Substantial shareholders holding 5% or more of the voting shares of a listed company should disclose their interests Controlling shareholders generally referred to those holding 30% or more of the voti
19、ng shares of a listed company alone or together with concerted parties may trigger a general offer under certain circumstances,26,What are the Major Risks of Stock Trading?,Higher expected return, higher risk Watch out for possible risks: Price risk Business risk Liquidity risk Corporate misgovernan
20、ce Brokerage failure Pooling risk of margin account Investment scams,27,Stock Exchange of Hong Kong Ltd.,Hong Kong Futures Exchange Ltd.,SEHK Options Clearing House Ltd.,Hong Kong Securities Clearing Company Ltd.,HKFE Clearing Corporation Ltd.,Listing Matters, Exchange Participants,Exchange Particip
21、ants,Clearing Participants,Clearing Participants,Clearing Participants,Licensed Corporations & Individuals (Stock brokers, Investment Advisors, etc),Takeovers & Share repurchases,All participants in trading activities,Investment Arrangements,Hong Kong Exchanges & Clearing Ltd,Regulatory Structure,25
22、,28,IntermediariesSupervision,Enforcement,Investor Education,Policy Making,Licensing,How SFC Regulates the Stock Market,Regulation of Listed Companies,A SFC Licensee,29,Licensing & Intermediaries Supervision,Single Licensing Regime under the SFO 9 Regulated Activities Licensed Corporations, Represen
23、tatives and Responsible Officers Registered Institutions Risk-based supervisory approach Monthly returns on Financial Resources Rules requirements On-site inspections Continuous Professional Training,30,Regulation of Listed Companies,Regulate takeovers, mergers and share buy-backs Dual filing mechan
24、ism under the SFO Extended powers to inspect documents of listed companies connected parties under the SFO Oversee SEHKs role as the front-line regulator of listing-related matters Ensure the compliance of HKEx (#388), Stockmartnet (#8123) and Galileo CapitalGroup (#8029) with the Listing Rules,31,E
25、nforcement,Monitor unusual market movements Investigate and take action against market malpractice market manipulation e.g. marking the close,wash sales insider dealing e.g. a recent case was concluded with a total penalty of HK$0.24B intermediary misconduct listed companies suspected prejudicial or
26、 fraudulent transactions,32,Enforcement results,33,Enforcement results,Over the past 19 months, More successful prosecutions on market manipulations with harsher penalties Penalties - fine, community service/jail sentence, suspended custodial sentence Publicly reprimand a licensee for selectively di
27、sclosing non-public price sensitive information Impose the first disciplinary action against a research analyst for frontrunning research reports Impose a jail sentence on a licensee who defrauded the SFC,34,Enforcement results,Over the past 19 months, A number of prosecutions on cold-callers A life
28、 ban on a licensee for re-entering the industry due to his attempted misappropriation of his clients money First dual filing successful prosecution - fine a listed company and its director for issuing an untrue announcement,35,Investor Education,Help investors get the facts Highlight the pros and co
29、ns of different financial products and services Give health warnings and explain the risks Empower investors to protect themselves,36,The Way Forward,Combat corporate misgovernanceCurrently, the SFC is not a single corporate regulator. Corporate activities are jointly regulated by:ICAC (corruption) Police (fraud, theft and other crimes which the SFC has no power over them) Statutory backing of certain listing rules not only extends the dual filing system, but also empowers SFC to prosecute those who breach the relevant statutory sections of the listing rules,
