In recent years SFC is keen on marketing how its regulatory greenlight can facilitate market development. Last month SFC announced it had authorized the first Islamic fund in Hong Kong, even when the fund promotor (Hang Seng) had not yet launched the product. Very proactive!
Last week SFC announced a new measure which would reduce the compliance burden and costs of issuers of structured products, including derivative warrants. Currently under Part XV of SFO, substantial shareholders and directors of an issuer that lists structured products on HKEx are required to report changes in their shareholdings in the issuer.
However, unlike disclosures relating to shareholdings in listed companies, this information is generally not useful to investors. Structured products issuers therefore regularly apply to SFC for waivers to exempt them from this reporting obligation. In recent years the number of structured products listed on HKEx, in particular derivative warrants, has increased substantially and there are now many cases of the same issuer applying for multiple waivers, which are routinely granted.
SFC considers that these multiple applications and the accompanying fees, which impose an administrative burden and costs on the industry and indirectly to investors, can be more effectively dealt with by the issue of a single waiver. SFC has therefore decided that from 21 Dec 2007 waivers will be granted to an issuer upon application, which will exempt all structured products issued over a 12-month period from the statutory reporting obligations, subject to receiving certain standard assurances from the issuer.
It is so funny that somebody who has created an unnecessary burden in the first place could claim a credit for reducing the burden subsequently!
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