Circular to Management Companies of SFC-authorised Investment Products Listed on The Stock Exchange of Hong Kong Limited concerning Severe Weather Trading of Hong Kong Securities and Derivatives

This circular aims to remind management companies of SFC-authorised investment products listed on The Stock Exchange of Hong Kong Limited (SEHK)1 (management companies) to consider the potential implications of the implementation of trading of Hong Kong securities and derivatives under severe weather conditions (SWT) on their listed SFC-authorised investment products and make appropriate arrangements.

1. Hong Kong Exchanges and Clearing Limited (HKEX) published the consultation conclusions on its proposed operational model and related arrangements for SWT on 18 June 2024. The SWT arrangements will be implemented on 23 September 20242.

2. On a severe weather trading day (SWT Day), trading, clearing and settlement services and operations will continue in both the securities and derivatives markets in Hong Kong and HKEX will maintain normal operations to the furthest extent possible.

3. In view of the SWT arrangements, management companies3 are reminded to: (a) carefully assess the potential implications of SWT on listed SFC-authorised investment products managed by them (including whether and to what extent any primary market dealing may be affected). Taking into account the operations of, and services provided by, relevant service providers and counterparties4 on an SWT Day, management companies should take appropriate measures to ensure normal operations as far as possible; (b) closely monitor the operations and activities (including secondary market trading and liquidity5) of these products during an SWT Day; (c) assess whether any amendments to the offering documents and/or constitutive documents of these products are required to reflect the operational changes arising from SWT or otherwise; and (d) keep investors informed of any material information concerning these products as a result of SWT and make appropriate arrangements to ensure proper investor communication on an SWT Day, including publication of relevant announcements on HKEX’s website. General

4. Management companies are reminded to promptly notify the SFC of incidents which materially affect investors’ interests on an SWT Day.

5. If in doubt concerning the operations under SWT, management companies should seek professional advice as soon as possible.

6. To seek clarification of any aspects of this circular, please contact the case team member of the Investment Products Division.

Investment Products DivisionSecurities and Futures Commission 

1 These include SFC-authorised exchange traded funds, leveraged and inverse products, real estate investment trusts and closed-ended funds.

2 See Consultation Conclusions on Severe Weather Trading of Hong Kong Securities and Derivatives Markets published by HKEX for details.

3 Management companies (in particular, management companies of real estate investment trusts) are also expected to observe relevant requirements under the Rules Governing the Listing of Securities on SEHK.

4 They include, without limitation, trustees, custodians, fund administrators, transfer agents, swap counterparties, index providers, market makers, participating dealers, and share registrars.

5 See the Circular to management companies and market makers of SFC-authorized exchange traded funds - ETF market making dated 17 April 2020 for details.

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