Circular Issued by the Securities and Futures Commission Regarding Monitoring of Operational Capability

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HONG KONG MONETARY AUTHORITY

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  Banking Conduct Department ill 1-7 ff! q ffß Our Ref: B1/15C G16/1C 2 November 2010 The Chief Executive All Registered Institutions Dear Sir / Madam, Circular Issued by the Securities and Futures Commission (SFC) Regarding Monitoring of Operational Capabilty I am writing to draw your attention to a circular issued by the SFC on 1 November 2010 ("the SFC Circular"). The SFC Circular reminds intermediaries to closely monitor their operational capabilties in the light of an increase in market turnover and the recent anouncement of significant rights issue planed by some listed companies and where appropriate to put in place contingency arrangements to cope with any increase in the volume of their business and the handling of such corporate action activities. Registered institutions are also reminded to put in place procedures to timely communicate material information to their clients and handle clients' instructions in the event of anouncement of rights issue on clients' stocks. A copy of the SFC Circular is attached at Annex. Yours faithflly, Meena Datwani Executive Director (Banking Conduct) Enc1. c.c. SFC (Attn: Mr Stephen Po, Senior Director ofIntermediaries Supervision) 55th Floor, Two International Finance Centre, l'm 9= J.:1 Ji~ .¡i8 ~m ~ ßtJ:1 ~ 9= 'L'2 M 55 fl 8 Finance Street, Central, Hong Kong ~ ~¡i: (852) 2878 8100 f.;a: (852) 2878 2100 Tel: (852) 2878 8100 Fax:i(852) 2878 2100 ~!I: Meena_Datwanitßhkma.gov.hk E-mail: Meena_Datwanitßhkma.gov.hk r. f.i : www.hkma.gov.hk Website: www.hkma.gov.hk

Annex
SECURITIES AND FUTURES COMMISSION m!îIUtíild§~~~~t Circular 11= 8FC m~t 1 November 2010 Circular to SEHK Exchange Participants Monitoring of operational capabilty In light of an increase in market turnover and recent announcement of significant rights issue plans by some listed companies, brokerage firms are advised to closely monitor their operational capabilties and where appropriate, put in place contingent arrangement to cope with any increase in your firm's volume of business and to handle such corporate action activities. In the event of the announcement of a rights issue on a particular stock which a brokerage firm holds for their clients, the firm should put in place procedures to timely communicate material information to their clients (e.g. the terms, timetable etc. of the rights issue) and handle the clients' instructions. Should you have any queries regarding the contents of this circular, please contact Ms Madonna Yip on 28427618. Intermediaries Supervision Department Securities and Futures Commission End SFO/IS/030/2010 Tel: (852) 2840 9222 Fax: (852) 2523 4598 Website: ww.sfc.hk