Stock Exchange of Hong Kong unveils enhancements to Designated Specialist Program

Maria Nikolova

In addition to the DS Program changes, the experience requirement as part of securities market maker eligibility for Leveraged and Inverse Products is removed.

The Stock Exchange of Hong Kong Limited unveils a range of enhancements to the Designated Specialist Program which come into effect today.

The Exchange explains that a Securities Market Maker (SMM) may apply to and register with the Exchange one or more of its corporate clients as a Designated Specialist (DS). To register a corporate client as a DS, an SMM shall demonstrate to the satisfaction of the Exchange that the client has satisfied at least one of the following conditions:

  • (i) it is an entity licensed by or registered with the Securities and Futures Commission (SFC) for Type 1 or Type 2 regulated activities under the Securities and Futures Ordinance, or licensed or registered for similar activity by an overseas authority having a memorandum of understanding with the SFC for the sharing of market surveillance information;
  • (ii) it is an entity which is a licensed bank regulated by an authority acceptable to the Exchange;
  • (iii) it is an entity which has maintained a current long-term credit rating of A- or above (Standard & Poor’s) or A3 or above (Moody’s); or
  • (iv) it has maintained a paid-up capital of at least HK$50,000,000 and shareholders’ funds of at least HK$100,000,000.

No SMM will be allowed to apply to register a corporate client to be its DS for a Market Making Security if such corporate client is already registered as a DS of another Securities Market Maker for the same Market Making Security. In addition, an SMM may apply to register one or more of its DS for any Market Making Security specified in its current SMM permit. Furthermore, an SMM which intends to register any DS for a specified Market Making Security shall indicate to the Exchange in such manner as the Exchange may from time to time determine if it will also perform market making activities for that specified security by itself together with the Designated Specialist.

In addition to the enhancements of the DS Program, with reference to the SFC’s circular on Leveraged and Inverse Products dated December 17, 2018, the experience requirement as part of SMMs’ eligibility for Leveraged and Inverse Products is removed with effect from today.

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