LC Paper No. LS 264/98-99
Legal Service Division Report on
Subsidiary Legislation Gazetted on 13 August 1999
|Date of Tabling in LegCo : ||6 October 1999
|Amendment to be made by :||3 November 1999 (or 10 November 1999 if extended by resolution)
Securities Ordinance (Cap. 333)
Securities (Miscellaneous) (Amendment) Rules 1999 (L.N. 216)
These Rules are made by the Securities and Futures Commission under sections 80(4)(d) and 146(1) of the Securities Ordinance (Cap. 333) ("the Ordinance"). Section 80(1) of the Ordinance prohibits a person from selling securities at or through the Unified Exchange unless, at the time he sells them, he has or, where he is selling as agent, his principal has a presently exercisable and unconditional right to vest the securities in the purchaser of them, or he reasonably and honestly believes that he has or, where he is selling as agent, that his principal has, that right.
Under section 80(4)(d) of the Ordinance, a sale of securities falling within a prescribed class of transaction shall not be governed by the prohibition provided for in section 80(1) of the Ordinance.
These Rules prescribe that a sale of Exchange Fund Bills, Exchange Fund Notes or specified instruments (i.e. any note issued by the Mass Transit Railway Corporation, the Airport Authority and the Hong Kong Mortgage Corporation Limited under their respective note issuance programmes arranged by the Monetary Authority), if carried out by Monetary Authority-appointed market makers, shall fall within a class of transaction prescribed for the purpose of section 80(4)(d) of the Ordinance, so that the prohibition in section 80(1) of the Ordinance shall not apply. According to the LegCo Brief issued by the Securities and Futures Commission dated 11 August 1999, the purpose of allowing designated market makers to short sell is to facilitate their performance of market maker functions. Both the Hong Kong Monetary Authority and the Stock Exchange of Hong Kong Limited support this proposal. These Rules have come into operation on 13 August 1999.
Ho Ying-chu, Anita
Assistant Legal Adviser
Legislative Council Secretariat
31 August 1999