Chatroom - Hong Kong Exchanges and Clearing Limited

www.hkex.com.hk | ExchangE
JAN 2012
Co-Head of IT Division
Richard Leung
Discusses the Relationship
of Exchanges and Technology
Hong Kong Tops
IPO Fundraising for
Third Straight Year
VHSI Futures Set for
Rollout in February
HKEx Prepares for
After-hours Futures
Trading

Contents
ExchangE
January 2012
1 Chief Executive’s Message
2 Hong Kong Leads World in IPO Fundraising for Three Consecutive
Years and Attracts More International Listings
– HKEx Continues its Efforts to Attract Listings from the Mainland
and Overseas
4 HKEx Markets Set Records for Shares, Futures and
Options Traded in a Year
5 Chatroom:
Co-Head of IT Division Richard Leung Discusses the Relationship
of Exchanges and Technology
10 Competitive Market Infrastructure is a Top Priority
– Upgrades Increase Speed of Two Key Securities Market Systems
– HKEx Prepares to Introduce SDNet/2 and Reduces Throttle Fees
– Next Generation Market Data System to be First of New Core
Platforms
13 Introduction of HSI Volatility Index Futures Set for 20 February
– Test Helps Market Participants Prepare for RMB-traded Derivatives
15 Initial BRICS Exchanges Alliance Plans Centre on
Benchmark Indexes
18 HKEx Prepares for After-hours Futures Trading
20 HKEx Expands Combination Trading Information
21 HKEx Updates Corporate Governance Code and
Related Listing Rules
23 HKEx Amends Proposed Changes to Listing Rules’ Property
Valuation Requirements
24 HKEx Conducts Consultation on Environmental, Social and
Governance Reporting
25 HKEx Publishes Results of Review of Listing Issuers’ Financial Reports
26 New System Streamlines Electronic Transmission of Correspondence
with Listing Division
– Changes Make e-Submission System More Convenient
27 HKEx Updates Market on its Suspension Policy in the Event of
a Service Interruption in its Information Dissemination System
29 HKEx Launches Issuer Services
30 HKEx’s Derivatives Market Gets Sustained Equal Support from
Exchange Participants and Investors
40 News Briefs:
• HKEx’s Results for January – September 2011
• Real-time HKEx Share Price on HKEx Website
• HKEx signs MOU with China Financial Futures Exchange
• HKEx signs MOU with Zhengzhou Commodity Exchange
• Best Corporate Governance Disclosure Awards 2011
• Newly Listed Companies
42 CSR Corner
44 Listing Matters
46 Compliance Decisions
50 HKEx Market Surveillance Highlights
51 Status Report on New Product and Market Development Initiatives

Chief Executive’s Message
The calendar has turned to another year, and I hope all of you spent some
well-deserved time with your families over the holidays. As we usher in
the Year of the Dragon, our attention turns to all of the exciting things we
have planned for 2012. Last year was a challenging time because of global
market volatility, but we ended the year on a high note, finishing first in
terms of IPO funds raised in 2011 and being named the most important
financial centre in the world by the World Economic Forum. We plan to
continue that momentum into 2012!
This issue of the Exchange is packed with information on some of our
recently completed projects and upcoming initiatives. We are currently in
the process of preparing to introduce SDNet/2, which is our next generation
securities and derivatives network. SDNet/2 will support higher bandwidth
capacity at lower network transmission latency and is scheduled to be
rolled out in the third quarter this year. There is an article about our plans
for a new market data system for our securities market.
In December 2011 we rolled out an upgrade to our securities trading
system, which increased the securities market’s efficiency and transparency
and paves the way for future growth. You will find details on that, as well as
the Issuer Services we introduced in the fourth quarter of 2011 to promote
companies listed in our securities market.
Richard Leung, who has been our Co-Head of IT since October 2011, joins
us in the Chatroom to talk about his team’s work and plans for the future.
Richard has more than 25 years of experience in his field and remembers
working with the Stock Exchange in the 1980s when he was with an
information vendor.
There are also articles on recent changes to the Stock Exchange’s Corporate
Governance Code and related Listing Rules, which aligned us more closely
with international best practices, and our consultation on Environmental,
Social and Governance reporting.
We also provide updates on our plans for volatility index futures and our
contingency plans after last year’s malicious attack on the HKExnews
website.
It’s going to be a very busy year, and I can’t wait to get started. I hope
everyone has a most healthy, happy and prosperous Year of the Dragon!
1 Exchange • January 2012
Charles Li
Chief Executive
“ We hope you enjoy this
edition of our newsletter.
Comments and suggestions
from Exchange readers are
always welcome. They can
be emailed to us at:
”
info@hkex.com.hk

Hong Kong Leads World in IPO
Fundraising for Three Consecutive Years
and Attracts More International Listings
HKEx’s securities market led the world in funds raised through initial public offerings (IPOs) for the third consecutive
year in 2011 (see Table 1 below). It was the 10th consecutive year the market was among the world’s top five in
IPO fundraising.
Table 1 IPO Fundraising in 2011
Exchange Deal Value (US$ billion)
1 Hong Kong 36.1
2 New York 31.4
3 Shenzhen 26.2
4 London 19.2
5 Shanghai 16.3
6 Nasdaq 10.7
7 Singapore 7.6
8 Spain 5.3
9 Brazil 4.4
10 Korea 3.6
Note: Includes REITs
Source: Dealogic
Eight IPOs in Hong Kong raised more than $10 billion in 2011; the largest one raised nearly $78 billion, or about
US$10 billion (see Table 2).
Table 2 Largest IPOs in HKEx’s Securities Market in 2011
Company Name (Stock Code) Funds Raised ($ billion)
1 Glencore International plc (805) 77.75
2 PRADA SpA (1913) 19.23
3 Shanghai Pharmaceuticals Holding Co, Ltd – H Shares (2607) 16.01
4 Chow Tai Fook Jewellery Group Limited (1929) 15.99
5 CITIC Securities Company Ltd – H Shares (6030) 14.25
6 MGM China Holdings Limited (2282) 12.57
7 New China Life Insurance Company Ltd – H Shares (1336) 10.29
8 Samsonite International SA (1910) 10.09
9 Sun Art Retail Group Limited (6808) 9.47
10 HKT Trust and HKT Limited – Stapled Securities (6823) 9.30
2 Exchange • January 2012

Hong Kong Leads World in IPO Fundraising for Three Consecutive Years
and Attracts More International Listings
International Listings
HKEx’s securities market had its first listings from several overseas economies in 2011. They included the first
listing by a company incorporated in Italy and the first Hong Kong Depository Receipts (HDR) listings by companies
incorporated in Japan and the US. The market also had its first listing by Kazakh company, and a company
headquartered in Switzerland was listed in Hong Kong for the first time.
Table 3 New Listing “Firsts” in 2011
SBI Holdings, Inc became the first Japan-incorporated company to list HDRs (April 14)
Glencore International plc became the first company headquartered in Switzerland to list in Hong Kong (25 May)
PRADA SpA became the first Italy-incorporated company to list in Hong Kong (24 June)
Kazakhmys PLC became the first company from Kazakhstan to list in Hong Kong (29 June)
The listing of Coach, Inc – RS was the first HDR listing by a US-incorporated company (1 December)
HKEx Continues its Efforts to Attract Listings from the Mainland and Overseas
HKEx has kept a strong focus on promoting itself as Asia’s leading listing venue for natural resources companies
and luxury goods companies, as well as the premier international market for listings by Mainland enterprises.
In the fourth quarter of 2011, HKEx’s Head of Issuer Marketing Eric Landheer travelled to Mongolia and Kazakhstan,
emerging markets with significant natural resources, to meet with companies that have expressed interest in
listing in Hong Kong and to speak at a conference in Almaty. In Hong Kong, HKEx organised four conferences in
the fourth quarter of 2011 to promote the benefits of a Hong Kong listing: the “Listing of European Companies
in Hong Kong” seminar with the European Chamber of Commerce and the “Listing of Japanese Companies in
Hong Kong” seminar with Deloitte Touche Tohmatsu, as well as two workshops during the Sichuan-Hong Kong
Financial Cooperation meetings in late November 2011, when a memorandum of understanding was signed
between the Sichuan Financial Services Office and HKEx.
Following the listings of Italy’s PRADA and Samsonite of the US in June 2011, HKEx further strengthened its
position as the listing venue of choice for the luxury sector with the Coach, Inc – RS listing by the American
accessories and gifts company in early December 2011 and the listing of Hong Kong-based Chow Tai Fook
Jewellery, which raised nearly $16 billion in its initial public offering in the middle of December 2011.
In the natural resources sector, newly listed companies in 2011 included Switzerland-based Glencore and
Kazakhstan’s Kazakhmys, which are incorporated in Jersey and the UK respectively.
The year 2011 was very important for HKEx’s global expansion, with four additional overseas jurisdictions
accepted (Alberta Province in Canada, France, Guernsey and Italy) and 19 new international company listings.
In all, 101 companies were listed on the Main Board or the Growth Enterprise Market for the first time.
3 Exchange • January 2012

HKEx Markets Set Records for
Shares, Futures and Options Traded
in a Year
There were several records in HKEx’s markets in 2011, with shares traded reaching an all-time high along with
the turnover of futures and options. CBBC and REIT turnover also rose to their highest levels ever. Nine products
in the derivatives market set turnover records and eight reached new highs in open interest.
Records Set in 2011
Securities Market Up to 31 December 2011 Pre-2011 Record
Total number of shares traded 39,907.3 bil 34,991.2 bil (Year 2010)
Total number of deals 214.9 mil 193.9 mil (Year 2010)
CBBC turnover $1,852.1 bil $1,676.1 bil (Year 2009)
CBBC turnover in a single trading day $15.8 bil (11 Oct 2011) $14.0 bil (12 Nov 2010)
REIT turnover $55.5 bil $51.5 bil (Year 2007)
Derivatives Market Up to 31 December 2011 Pre-2011 Record
(Contracts) (Contracts)
Trading Turnover
Total Futures and Options 140,493,472 116,054,377 (Year 2010)
Total futures and options
in a single trading day
1,256,038 (28 Sep 2011) 1,180,005 (26 Mar 2008)
Total Futures 50,741,995 44,721,743 (Year 2008)
Total Options 89,751,477 73,047,854 (Year 2010)
Hang Seng Index Futures 23,085,833 21,716,508 (Year 2008)
Mini-Hang Seng Index Futures 10,294,537 9,279,877 (Year 2009)
H-shares Index Futures 15,003,870 14,440,965 (Year 2008)
Mini H-shares Index Futures 1,845,116 992,224 (Year 2010)
Stock Futures 444,014 351,514 (Year 2007)
Hang Seng Index Options 10,667,426 8,515,049 (Year 2010)
Mini-Hang Seng Index Options 954,414 482,691 (Year 2010)
H-shares Index Options 3,771,799 2,910,713 (Year 2010)
Stock Options 74,325,068 61,125,647 (Year 2010)
Open Interest
H-shares Index Futures 177,892 (28 Sep 2011) 162,527 (27 Oct 2010)
Mini H-shares Index Futures 6,030 (17 Jun 2011) 2,728 (28 Dec 2010)
Mini Hang Seng Index Futures 21,682 (17 Jun 2011) 11,148 (29 Jul 2009)
Stock Futures 26,482 (25 Aug 2011) 25,956 (14 Mar 2007)
H-shares Index Options 380,344 (28 Dec 2011) 344,647 (29 Dec 2009)
Hang Seng Index Options 483,835 (28 Sep 2011) 477,129 (29 Dec 2010)
Mini Hang Seng Index Options 22,086 (29 Aug 2011) 15,016 (27 Oct 2010)
Stock Options 9,218,955 (28 Nov 2011) 8,825,259 (26 Nov 2010)
4 Exchange • January 2012

Chatroom
5 Exchange • January 2012
Co-Head of IT Division
Richard Leung
Discusses the Relationship
of Exchanges and Technology
Richard Leung has been HKEx’s Senior Vice
President and Co-Head of the Information
Technology (IT) Division since October
2011. Before joining HKEx, he was the chief
technology officer (CTO) of Chi-X Global,
an operator of alternative trading systems.
Mr Leung has also been CTO of Cicada,
where he established a technology centre in
Hong Kong, and he served in various senior
technology positions over 14 years with
Dow Jones Telerate’s Asia-Pacific business.
Mr Leung has a Master of Science degree in
E-Commerce from Hong Kong Polytechnic
University.

Chatroom
How did you decide to join HKEx?
What were your impressions of HKEx
before and after you joined?
The opportunity to join HKEx came up early last year
when I was working with an alternative trading platform
provider, Chi-X Global, as their chief technology officer.
In my three years there, a primary focus was delivering
high-performance trading technologies to help the firm
win market share from the incumbent exchanges and
compete for business within the growing high frequency
trading market. I viewed the opportunity at HKEx as
one that would allow me to leverage my experience in
a very positive direction, helping HKEx become even
better prepared for future business opportunities and
potential competition.
While I was considering the role at HKEx, I was briefed
on the Board’s decision to support the Next Generation
Programme, involving a number of development
initiatives focused on the exchanges’ technology
platforms for the next 10–15 years. For me, it was a
tremendously attractive opportunity to be involved in
and help lead this effort.
I started working with the Stock Exchange back in the
mid-80s when the first generation market data feed
became available. At that time, I was working for one
of the major global information vendors which took
the feed. After that, I continued to be involved with the
Exchange as an outsider. Frankly, my general impression
from those experiences was that I was curious about
the unduly long consultation and approval process for
IT development at HKEx. I felt that HKEx was very
conservative in terms of new initiatives and that projects
often took a long time to execute.
However, this early impression was not the whole story.
One of the things I learned to understand quickly after
joining HKEx is the importance of its obligation to ensure
that the interests of the broad overall market are taken
into account. This is a slightly different market role than
that played by the alternative trading platforms, which
quickly move as needed and choose their own “sweet
spots” in which to operate at any given time. HKEx
simply has a different set of responsibilities and role in
the market, and this necessarily factors into how we
plan our development roadmap.
6 Exchange • January 2012
How does IT fit into HKEx’s current
strategic plan and its long term roadmap?
What are the IT Division’s main objectives
in the short, intermediate and long term?
Most, if not all, of the initiatives in the HKEx’s current
strategic plan involve IT. IT is the core in delivering any
new services. As a result, IT actively participates in
creating HKEx’s new plans and developing the longterm
roadmap.
Apart from working on new projects, IT needs to
grow in order to allow us to put together a workable
succession plan for each and every department in IT.
This is very important to ensure that IT can continue
to provide a high, consistent service level to HKEx and
its customers.
In the short term, we will carry out an exercise to
ensure all web-facing applications meet our security
standards, and we will focus on the execution of the
Next Generation Programme. Some projects such as
the Next Generation Market Data System have already
started, while others will begin this year. All projects
under the Next Generation Programme are tightly
connected and interdependent, so our execution is
very carefully planned.

Chatroom
Over the long run of course, the key objective is to
ensure HKEx is always competitive with other leading
exchanges in the world in terms of our technology
platform capabilities and in maintaining the high
availability and reliability our customers enjoy. I am
confident in our expert IT team and the ability of our
entire organisation to work together to meet these
objectives.
Generally what are the major challenges
of an exchange or alternative trading
platform’s IT team?
Simply put, the exchange industry around the world
has moved from “technology-enabled” to “technologycentric”.
Technology has arguably become the
key differentiator for exchanges in an increasingly
competitive landscape.
The operating and competitive landscape for exchanges
changes very rapidly, especially in markets where
there are multiple venues for trade execution. As a
result, an exchange’s IT team must be very nimble and
7 Exchange • January 2012
responsive, with the ability to come up with technical
solutions very quickly, and frequently. The team must
be able to maintain all existing systems, and at the
same time, provide technical solutions to meet new
requirements on a regular basis.
Another challenge is that it is often difficult to find
qualified, experienced IT professionals who have the
relevant technical knowledge in our domain. Given this
reality, it means that there are great opportunities for
new, less experienced staff, even those straight out of
university, who can be trained in the industry and our
IT environment. The good news for HKEx is that Hong
Kong is a large international financial centre, and as we
are known as a leader in our field, we can attract talent.
The pace of change in technology is incredible. So
another challenge for exchange IT teams is getting the
time to perform research and development on a regular
basis, in order to understand how the new and evolving
technology may help the exchange. This requires close
involvement with the technology and exchange industry
globally.

Chatroom
Whether it is the additional headcount, the training of
people or new IT research and development activities,
we require very strong corporate and management
support and commitment because of the investment
that we have to put into projects is very significant
and the duration of our projects is long. During my
short tenure at HKEx, I have seen very strong support
from the entire organisation for the Next Generation
Programme and the IT Division as a whole. This will
definitely help the IT team to deal with the challenges
ahead of us.
What are the future trends in exchanges’
systems?
Cost effectiveness remains an important factor in
exchange technology. Because of this, open systems
have increasingly become the standard for exchanges’
IT systems. There are many benefits in using open
systems, such as low cost of ownership, and there are
many licence-free tools available. Importantly, the use
of open systems also makes it easier to find the right
technical skill set in the market.
8 Exchange • January 2012
In using open systems, however, it is
critical to build a high level of resilience
into the software design. While there
may be a cost in this regard, the return
is that designers can tailor individual
systems for resilience and redundancy
versus speed.
HKEx has always used the best of
breed technical systems available at
the time. The existing platforms have
served us well for many years, and they
continue to serve us well, but they are
no longer mainstream technology. In our
Next Generation Programme, we will
be following the latest trend in the IT
industry and embracing open systems.
High speed, or low latency, is perhaps
the most prevailing theme of new
exchange IT systems globally because it
is relatively easy for the general public to
relate to. Some of the faster exchange
trading platforms in the world have
latency at around the 100 microsecond
mark. However, latency is not the only
factor. Exchanges need to look at the
capacity and scalability of their future IT systems as
well. For example, new systems at HKEx must be able
to support anticipated order flows from the Mainland
when the investors there are allowed to directly invest
in Hong Kong.
Another trend is that exchanges’ systems must
be equipped with real-time latency measurement
capabilities required to measure and report the latency
of orders passing through the system at all times. All
systems must be synchronised using a GPS (Global
Positioning System) with an atomic clock source at
nanosecond resolution. Server and network equipment
hardware and the operating system must support a
high standard.

Chatroom
What was the thinking behind the data
centre HKEx will be using in the not too
distant future?
Our Next Generation Data Centre (NGDC) provides an
opportunity to upgrade to a state-of-the-art operations
and core network infrastructure to address current and
future technology needs. We are building for the future.
This will be the home of all exchange systems for at
least the next 20 years. When it is completed, we will
be able to host all of our production platforms under
one roof (they are currently located in five different data
centres) in a Tier-4 data centre, the highest possible
recognised grade for a data centre. We can rationalise
our operations and provide even higher quality service
to our Exchange Participants and technology vendors.
The hosting service that we will provide in the NGDC
is designed to be an ecosystem for electronic trading
participants. Equivalent to a trading hall for brokers,
the NGDC will be a meeting place for machines. Such
meeting places provide valuable benefits, including low
latency, high capacity, etc, to institutional investors and
retail investors alike, as long as they trade electronically.
HKEx will be one of the last major exchanges in the
world to introduce hosting services, and I am pleased
that we finally can offer such a service to our trading
community in Hong Kong.
The NGDC will be a carrier neutral facility. We welcome
any telecommunications carriers interested in providing
services at our facility. The aim is to allow cost-effective
global connectivity for all users of the data centre so
that they have easy access to the other international
financial centres. This is a necessity if Hong Kong is to
remain an international financial centre.
9 Exchange • January 2012
Sometimes people associate the provision of hosting
services solely with supporting high frequency trading
activities, but this is not our intention. The intention is
to use the hosting service as a catalyst for business
growth through the provision of the new ecosystem.
Exchange Participants that employ electronic trading
will conduct their business more cost-effectively, and
technology vendors will have access to the brokers and
their customer base more efficiently in the data centre,
allowing them to provide better and more cost-effective
services. Finally, HKEx will benefit from a new revenue
stream being enjoyed by peer exchanges around the
world. I think this is a win-win for every stakeholder.

Competitive Market Infrastructure
is a Top Priority
The HKEx Strategic Plan 2010-2012 calls for investment in IT infrastructure to maintain a competitive edge
regionally, meet emerging expectations of demanding customers and position HKEx to capture longer term growth
opportunities. A major trading system upgrade was completed in December 2011. Additional projects are in
progress to replace the existing network infrastructure and market data systems. To prepare for an anticipated
increase in data traffic, HKEx will migrate its existing SDNet/1 network to SDNet/2 in three phases, with the first
phase to complete in the third quarter of 2012. In 2013, the Next Generation Market Data System (NGMDS) will
be rolled out to support higher system capacity, provide new market data products and equip HKEx to build a
distribution footprint on the Mainland. The following articles provide additional information on the trading system
upgrade and the SDNet/2 and NGMDS projects.
Upgrades Increase Speed of
Two Key Securities Market Systems
HKEx rolled out its
upgraded securities
trading system, AMS/3.8,
and securities market data
dissemination system,
MDS/3.8, on
5 December 2011.
10 Exchange • January 2012
As a result of the upgrade, the trading system’s order processing capacity
has been increased by about 10-fold to 30,000 orders per second, which
can be further scaled up to at least 150,000 orders per second through
hardware additions if the need arises. In addition, trading system latency
has been reduced to 2 milliseconds on an average trading day, about 70
times faster than before. Between the launch of AMS/3.8 in early December
2011 and the end of the month, the average host processing latency was
around 1.5 milliseconds.
Enhanced market transparency is one of the other benefits of the upgrade,
as AMS/3.8 and MDS/3.8 disseminate the 10 best price levels compared
to the five best price levels before the upgrade. The market data broadcast
rate has been increased as well, doubling from 1,000 to 2,000 stock
page updates per second, and some legacy system functions have been
streamlined to help improve the operating efficiency of Stock Exchange
Participants.

HKEx Prepares to Introduce SDNet/2
and Reduces Throttle Fees
In anticipation of
a substantial increase in
data traffic in its securities
and derivatives markets
and the emergence of new
market data products,
HKEx will migrate its
existing securities and
derivatives network,
SDNet/1, to the system’s
next generation SDNet/2
in three phases.
11 Exchange • January 2012
The first phase migration, covering the networks of HKEx’s securities
trading system (AMS/3.8), securities market data dissemination system
(MDS/3.8) and issuer information feed service (IIS), will be completed in
the third quarter of 2012. The second and third phases, to be completed
in the second and fourth quarters of 2013, will comprise HKEx’s derivatives
market systems (HKATS/DCASS/PRS) and its securities clearing system
(CCASS/3) respectively.
SDNet/2 will support higher bandwidth capacity at lower network
transmission latency while allowing users to choose from three accredited
telecom carriers – Hong Kong Telecommunications (HKT) Limited, Hutchison
Global Communications Limited and Wharf T&T Limited – based on the
user’s business needs. Each accredited network carrier has agreed to
charge no more than the current price for the same circuit bandwidth.
The monthly user fees for HKEx-provided securities trading devices will
be reduced after the network migration. Based on the trading devices
currently in use, Exchange Participants (EPs) will share cost savings of
over $6 million a year after the rollout of SDNet/2.
In addition to the network initiative, HKEx has halved its one-off charge
for increases to its Standard Throttle Rate, which governs the throughput
rate for EP order submission from their own trading devices into AMS/3.8
through Open Gateways. The standard rate is one order per second and
HKEx now charges $50,000 for each one-order-per-second increase in
the rate, instead of the $100,000 it charged before the rollout of AMS/3.8
on 5 December 2011. In the last four weeks of December 2011, EPs that
increased their throughput rates saved a total of $5 million based on the
former cost.

Next Generation Market Data System
to be First of New Core Platforms
HKEx has decided to
develop its next generation
core platforms with a new
market data system as the
first building block. The
Next Generation Market
Data System (NGMDS)
will not only provide higher
system capacity, but will also
assist in the development
of HKEx’s market data
business.
12 Exchange • January 2012
The NGMDS will support multi-asset classes with a single platform and
common message protocol. Currently, HKEx uses different platforms and
multiple message protocols to distribute market data to information vendors
and Exchange Participants.
Following the rollout of the NGMDS, HKEx will be able to introduce new
and diversified market data product feeds in terms of content, depth and
latency to meet different customer demands. Initially, there will be a new
suite of feeds, including conflated market-by-price feed, streaming marketby-price
feed, streaming market-by-order feed and a dedicated index
feed. The NGMDS will also allow HKEx to create the new product feeds
quickly in response to market demand given its flexible product packaging
capability. Currently, the range of product feeds offered by HKEx is limited
and relatively thin, with two each for the securities and derivatives markets.
Strategically, the NGMDS will equip HKEx to build a footprint on the
Mainland because the system is designed to support a market data hub
there. A market data hub on the Mainland would give domestic information
vendors convenient and easy access to market data offered by HKEx.
More importantly, the NGMDS will bring HKEx up to parity with other
leading global exchanges in terms of market data latency. HKEx anticipates
the NGMDS will reduce market data latency to 100 microseconds (about
1/10,000 of a second) from the current level of about 100 milliseconds
(about 1/10 of a second).
The NGMDS is targeted to be rolled out by mid-2013 for HKEx’s securities
market and by late 2013 for the derivatives market at HKEx.

Introduction of HSI Volatility
Index Futures Set for 20 February
HKEx will introduce
trading of HSI Volatility
Index (VHSI) futures
on Monday, 20 February
2012 to provide a
new innovative tool
for investors to hedge
volatility risk and
trade pure volatility
exposure.
13 Exchange • January 2012
The VHSI is a volatility benchmark for Hong Kong’s stock market. It
measures the expected volatility of the Hang Seng Index (HSI) over the next
30 days implied by the prices of HSI options traded in HKEx’s derivatives
market. Therefore, investors can use the VHSI to estimate the implied
volatility in options pricing.
The VHSI is owned by Hang Seng Indexes and compiled according to
the Chicago Board Option Exchange’s volatility index methodology with
adaptation to the Hong Kong stock market’s characteristics. The index
was launched on 21 February 2011.
VHSI futures are expected to attract trading interest from both institutional
and retail investors and complement some of the existing products in
HKEx’s markets and the over-the-counter, or OTC, market. Market makers
will be available to provide continuous two-way quotes for VHSI futures,
which will facilitate trading liquidity in the new product.
Additional information on VHSI futures is available on the HKEx website.
VHSI Historical Movement (February to December 2011)
Daily HSI closing point
Daily VHSI closing point

Introduction of HSI Volatility Index Futures Set for 20 February
VHSI Futures Contract Summary
Item Contract Terms
Underlying Index HSI Volatility Index
Contract Multiplier $5,000 per index point
Minimum Fluctuation 0.05 index point (or $250)
Contract Months Spot month and the next two calendar months
Trading Hours 9:15 am - 12:00 noon and 1:30 pm - 4:15 pm
14 Exchange • January 2012
9:15 am - 12:00 noon and 1:00 pm - 4:15 pm (Effective 5 March 2012)
(Expiring contract month closes at 4:00 pm on the Last Trading Day)
There is no afternoon trading session on the eves of Christmas, New Year and
Lunar New Year.
Last Trading Day 30 calendar days prior to the second last Business Day of the next month
Final Settlement Price The average of quotation of VHSI taken at 1-minute intervals between 3:30 pm
and up to 4:00 pm on the Last Trading Day
Transaction Costs Exchange Fee $10.00
Commission Levy $0.60
Commission Rate Negotiable
Note: HSI Volatility Index (the Index) is published by Hang Seng Indexes Company Limited (HSIL), which has contracted with Standard & Poor’s
Financial Services LLC (S&P) to maintain and calculate the Index. Standard & Poor’s and S&P are trademarks of S&P and have been licensed
for use by HSIL. VIX ® is a trademark of Chicago Board Options Exchange, Incorporated (CBOE) and S&P has granted a license to HSIL, with
permission from CBOE, to use such mark for purposes relating to the Index. The Index is not owned, sponsored, endorsed or promoted by S&P
or CBOE and neither S&P nor CBOE makes any representation regarding the advisability of investing in products that are based on such Index
or otherwise relying on such Index for any purposes and neither S&P, CBOE nor HSIL shall have any liability for any errors or omissions in the
Index or any values thereof.
Test Helps Market Participants Prepare
for RMB-traded Derivatives
HKEx welcomed the response to the market readiness test it organised in January 2012 to help its Exchange
Participants (EPs) and Clearing Participants (CPs) prepare their systems and operations for RMB-traded futures
and options.
The test covered buying, selling and post-transaction activities with RMB-traded index futures, index options and
stock options via HKATS, the trading system for HKEx’s derivatives market, and DCASS, the market’s clearing
and settlement system. After the test, 44 EPs and 43 CPs which trade index futures and index options declared
they are ready to trade those products in RMB, and 26 EPs and 25 CPs from the stock options market reported
readiness to trade stock options in RMB.
EPs and CPs which did not join the market readiness test in January can still verify their internal systems via the
HKATS testing environment and its mock RMB-traded futures and options contracts.
HKEx plans to introduce RMB-traded stock options, index futures and index options but there are no rollout dates
at this point. Access to RMB-traded futures and options will only be granted to Participants which have set up
RMB designated bank accounts with the relevant clearing houses.

Initial BRICS Exchanges Alliance Plans
Centre on Benchmark Indexes
HKEx and stock exchanges
from Brazil, Russia, India
and South Africa have
announced plans for
an exchanges alliance,
symbolising closer
cooperation among BRICS
(Brazil, Russia, India,
China and South Africa)
exchanges. The alliance
will enable investors to
gain exposure to the
BRICS bloc of emerging
economies through
exchange-listed products.
15 Exchange • January 2012
BRICS economies
As of 2010, BRICS economies accounted for 18.2 per cent of the world’s
GDP (see Exhibit 1). From 2000 to 2010, their GDP growth significantly
outperformed the rest of the world (see Exhibit 2).
Exhibit 1 GDP (at current price) (2010)
Source: IMF
Exhibit 2 GDP growth (from 2000 to 2010)
Source: IMF
World total: US$62,911 bil

Initial BRICS Exchanges Alliance Plans Centre on Benchmark Indexes
International investors are interested in opportunities related to large emerging economies. As a result, investment
instruments such as Exchange Traded Funds (ETFs) and mutual funds linked to BRICS economies became popular
over the past few years. In Hong Kong, the securities market had six BRICS-related ETFs at the end of 2011 with
combined assets under management (fund total) of around US$2,399 million.
Alliance’s Phase I and beyond
HKEx is seeking regulatory approval of its part under the Phase I product development plan of the BRICS
Exchanges Alliance. Under the plan, HKEx’s Futures Exchange will list the benchmark index futures of the other
alliance members and they will list the Futures Exchange’s Hong Kong benchmark index futures. HKEx intends
to offer index futures on BRICS exchanges’ benchmark indexes in Hong Kong dollars, with trading during the
Futures Exchange’s regular trading hours.
These new products are a way for HKEx to become a one-stop platform for investors seeking BRICS markets
trading opportunities in the Asian-Pacific time zone.
After the Phase I launch, the BRICS Exchanges Alliance will explore creating composite products which give
investors exposure to all of the BRICS economies. In addition, the BRICS exchanges hope to collaborate in other
areas in the future.
Why benchmark index futures
The alliance is starting with benchmark index futures because benchmark indexes are excellent indicators of stock
market performance and are adjusted periodically to reflect changes in the market; they are often recognised
beyond their home market; and they may be well known in many parts of the world. If investors are not familiar
with a benchmark index, they can familiarise themselves with its basics quickly.
Index futures trade actively in alliance members’ markets and are an efficient way for investors to take bullish
or bearish positions on a given market. As a result of leverage, the initial capital required to purchase an index
futures contract is a fraction of the contract’s value.
Basics of Benchmark Indexes from BRICS Economies Under Consideration
Exchange BM&FBOVESPA MICEX BSE (formerly known Johannesburg
(BVMF) as Bombay Stock Exchange
Stock Exchange) (JSE)
Country Brazil Russia India South Africa
Index Bovespa MICEX Sensex FTSE Top 40
Launch Date 1968 1997 1986 2002
Index Value* 56754 1402 15454 28469
Constituents* 68 30 30 42
Currency Brazilian real Russian ruble Indian rupee South African rand
Underlying Exchange
Market Capitalisation
(US$ million)
1,228,936.2 770,609.0 1,007,182.9 789,037.1
^
20 Days Historical Volatility 22.48 28.87 21.91 11.43
* As of 31 December 2011
^ Source: World Federation of Exchanges, as of December 2011
16 Exchange • January 2012

Initial BRICS Exchanges Alliance Plans Centre on Benchmark Indexes
BRICS Indexes Performance (2006 to 2011)
Regular Derivatives Trading Hours of Selected BRICS Exchanges* (HK Time)
As of December 2011
* HKEx hours are proposed hours for BRICS Exchange Alliance contracts.
17 Exchange • January 2012

HKEx Prepares for After-hours
Futures Trading
HKEx will proceed with
its proposal on after-hours
futures trading (AHFT)
and introduce AHFT in
the second half of 2012,
subject to regulatory
approval and market
readiness, in view of the
strong support it received
from respondents to its
consultation paper on
the proposal.
18 Exchange • January 2012
Background
On 30 May 2011, HKEx published a consultation paper which sought
market views on the proposed introduction of AHFT. The comments HKEx
received indicated that a vast majority of the respondents, in particular
Exchange Participants (EPs), support the proposal.
HKEx received a total of 455 responses from its EPs and Clearing Participants
(CPs), professional and industry associations, market practitioners and
individuals. More than three-quarters of the respondents (353 respondents,
or about 78 per cent) expressed support for the proposal, of which 67 were
Futures EPs with a combined 80 per cent share of the Hang Seng Index
(HSI) and H-shares Index (HHI) futures markets in the first half of 2011.
Key comments from respondents who supported AHFT were that the
introduction of AHFT would provide trading/hedging opportunities to
investors in response to news and events in the European or US market.
They also believed that the futures client base and after-hours futures
business would increase. Some also commented that AHFT could reduce
the volatility in the next trading day’s opening as some investors would have
hedged or adjusted their positions in the AHFT session in response to news
and events in the European and US time zones. Some respondents who
did not support AHFT raised concerns about the operational arrangements
and the potential for excessive market movements during AHFT.
For further details, please refer to the following documents in the Market
Consultation section of the HKEx website:
• Consultation Paper
• Responses to the Consultation Paper
• Consultation Conclusions

HKEx Prepares for After-hours Futures Trading
Arrangements for AHFT
A brief summary of the operational arrangements for AHFT is set forth in the bullet points below:
• HKEx will introduce an after-hours trading session (T+1 Session) for its futures market which will begin at
5:00 pm and end at 11:00 pm.
• At the initial stage, HSI futures, HHI futures and gold futures will be traded in the T+1 Session. Other derivatives
will be considered for inclusion at a later stage.
• There will be a 5 per cent price limit during the T+1 Session, with no sell orders at a price below 95 per cent
of the last traded price of the spot month contract in the day’s other trading sessions and no buy orders at a
price above 105 per cent of the last traded price of the spot month contract in the days’ other trading sessions
allowed.
• All trades in the T+1 Session will be cleared and settled on the following trading day.
• HKEx’s risk management will be through appropriate regular, ad-hoc and/or real-time monitoring during the
T+1 Session and via a new mandatory variation adjustment and margin call following the market open on the
following trading day and payable by 12:00 noon that day.
Futures EPs/CPs which would like to participate in AHFT need to prepare their systems and be ready for market
rehearsals by mid-2012, review their client risk management/margining policies and client agreements in relation
to AHFT, and, where applicable, arrange human resources to support AHFT.
To help EPs/CPs better understand the operating arrangements for trading, clearing and risk management during
AHFT, HKEx scheduled five briefing sessions for December 2011 and January 2012 and arranged to distribute an
information paper after the last of the five sessions. Technical specifications will be distributed in the first quarter
of 2012 to facilitate EPs/CPs’ system development to support AHFT. Market rehearsals will be scheduled for
mid-2012.
19 Exchange • January 2012

HKEx Expands Combination
Trading Information
20 Exchange • January 2012
To cope with global demand for market transparency and rising interest in
combination trading of futures and options, HKEx enriched the combination
trading information it provides and began disseminating the upgraded
information through the derivatives market trading system, HKATS (Hong
Kong Futures Automated Trading System), and the HKEx website from 12
December 2011. The enriched information is also available to information
vendors for distribution to their clients.
Price Information Window in HKATS
What is a combination series?
Enriched Combination Trading Information
A combination series is composed of at least two single series as pre-defined
by HKEx. The typical one is a simultaneous purchase and sale of two
different series in the same product but with different delivery months, which
is known as a Calendar Spread trade. In addition to Calendar Spreads in
all futures markets, there are Strangles and Straddles in Hang Seng Index
options and Synthetic Futures in selected Stock Options classes.
Before the enhancement, only the bid/ask prices with quantities of
combination series were disseminated to Exchange Participants and
information vendors. If they wanted more trading information such as the
traded price of the combination series, they had to calculate it themselves.
To satisfy market demand, HKEx began disseminating the Opening
Price, Day High Price, Day Low Price, Last Traded Price, Last Traded
Quantity and Turnover for combination series. To ensure a smooth rollout of
the enhanced information, Exchange Participants and information vendors
were notified of HKEx’s plans in May and June of 2011 respectively and
reminder circulars on the launch date were issued in November 2011.
Several information vendors, including 2GoTrade Limited, ACTIV Financial
Systems, Inc, Bloomberg Finance LP, Interactive Data Corp and Reuters
Limited, are carrying the enriched information.

HKEx Updates Corporate
Governance Code and Related
Listing Rules
On 28 October 2011,
HKEx published
the Consultation
Conclusions on Review
of the Corporate
Governance Code and
Associated Listing
Rules (Consultation
Conclusions) after
analysing the 118
submissions it received
from respondents to the
related consultation paper
that was published on
18 December 2010.
The respondents
included listed issuers,
market practitioners, and
professional and
industry associations.
21 Exchange • January 2012
The primary aim of the review was to enhance the overall standard of
issuers’ corporate governance and align HKEx’s Corporate Governance
Code (Code) and Rules with international best practices. Issuers and the
market as a whole benefit from enhanced corporate governance.
The revised Code and Rules encourage better accountability of issuers
and directors. The new measures will improve transparency, enhance the
quality and effectiveness of directors and company secretaries, and bring
into sharper focus the important functions of the various board committees.
The main results of the review include:
Directors
• New Rules and Code Provision on directors’ duties and time commitments;
• New Rule that independent non-executive directors must form at least
one-third of an issuer’s board;
• New Code Provision on director training and the issuer must disclose
in the Corporate Governance Report of how each director has complied
with the Code Provision on training;
• New Code Provision on separate shareholder resolution to re-elect an
independent non-executive director who has served more than nine
years;
• Board committees
– New Rules on establishment, composition and terms of reference of
remuneration committee;
– New Code Provisions on establishment, composition and terms of
reference of nomination committee;
– New Code Provisions on establishment and terms of reference of
corporate governance function;
– Revised Code Provision on terms of reference of audit committee:
it should review arrangements for employees to raise concerns on
financial reporting and internal controls;
– New recommended best practice that audit committee should
establish a whistle blowing policy and system for employees and third
parties to raise concerns in confidence;

HKEx Updates Corporate Governance Code and Related Listing Rules
• New Rule requiring disclosure of chief executive’s remuneration;
• New Code Provision on disclosure of senior management’s remuneration by band;
• New recommended best practice on board evaluation;
• Revised Rules to remove 5 per cent threshold for voting on a resolution in which a director has an interest;
and
• New Code Provision that management should provide members of the board monthly management accounts
or management updates.
Shareholders
• New Rule requiring shareholder approval for appointment and removal of an auditor before the term of its office
ends;
• New Rule requiring publication of an issuer’s constitutional document on the HKExnews website and on the
issuer’s website; issuers must also disclose any significant changes in the issuer’s constitutional documents
during the year in their Corporate Governance Report;
• New mandatory disclosure requirement on shareholders’ rights; and
• New Code Provision that an issuer should establish a shareholder communication policy and publish procedures
for election of directors on its website.
Company secretary
• New Rule requiring company secretaries to attend 15 hours of professional training;
• New Code section on the company secretary.
Whilst some of the revised Rules took effect on 1 January 2012, the revised Code and related Rules will be
effective on 1 April 2012.
The market generally supports these latest HKEx corporate governance initiatives.
Seminars on Revised Code and Rules
Following the publication of the Consultation Conclusions, HKEx organised 10 comprehensive half-day seminars
in November and December 2011 on amendments of the Code and other Listing Rule updates. A total of 1,781
participants including 1,589 from 938 listed issuers and 192 from 118 market practitioner firms attended the
seminars.
A recording of one of the seminars has been posted on HKEx’s website as a webcast.
In January 2012, HKEx presented the same seminar in Putonghua in Hong Kong, Shanghai and Beijing. One of
the Putonghua seminars has also been posted on the HKEx website as a webcast.
A total of 519 participants including 505 from 325 listed issuers and 14 from Mainland regulatory agencies
attended the seminars.
22 Exchange • January 2012

HKEx Amends Proposed Changes to
Listing Rules’ Property Valuation
Requirements
HKEx and the Securities
and Futures Commission
(SFC) published their Joint
Consultation Conclusions
on Proposed Changes
to Property Valuations
(Joint Consultation
Conclusions) in October
2011 after reviewing
the 52 submissions they
received in response to
their consultation paper
on the proposals. Market
practitioners, issuers,
professional associations
and individuals submitted
views.
23 Exchange • January 2012
Comments by respondents indicated that the market supported the
proposed changes, which were designed to streamline property valuation
requirements for initial public offering, or IPO, applicants and issuers. HKEx
and the SFC adopted the proposals and they were implemented through
amendments to the Listing Rule that took effect on 1 January 2012.
The Listing Rules have been amended as follows:
• For applicants:
– Require different valuation requirements for property activities and
non-property activities;
– For property activities, require property valuations unless the property
interest has a carrying amount below 1 per cent of the applicant’s
total assets. The total carrying amount of property interests not valued
must not exceed 10 per cent of the applicant’s total assets. Summary
disclosure in the listing document is allowed if the market value of
a property interest as determined by the valuer is less than 5 per cent
of the applicant’s total property interests that are required to be
valued;
– For non-property activities, require a property valuation only if the
carrying amount of a property interest is or is above 15 per cent of
the applicant’s total assets; and
– For mining activities, do not require a separate valuation of property
interests ancillary to mining activities if the mining activities and
ancillary property interests have been valued as a business or an
operating entity.
• For issuers:
– Remove property valuation requirements for an acquisition or disposal
of a company listed on HKEx;
– For an acquisition or disposal of an unlisted company, do not require
valuations if the carrying amount of a property interest in the company
being acquired or disposed of is below 1 per cent of the issuer’s total
assets. The total carrying amount of property interests not valued
must not exceed 10 per cent of the issuer’s total assets; and
– For mining activities, do not require a separate valuation of property
interests ancillary to mining activities if the mining activities and
ancillary property interests have been valued as a business or an
operating entity.
The Joint Consultation Conclusions are available on the HKEx website.

HKEx Conducts Consultation
on Environmental, Social and
Governance Reporting
In view of increasing
focus on environmental,
social and governance
(ESG) issues in the
business community,
the Board considers that
HKEx should take steps
to raise ESG awareness
among Hong Kong-listed
issuers (issuers) and
encourage them to start
ESG reporting.
24 Exchange • January 2012
Many issuers are not reporting on ESG issues or not yet ready to fully
comply with the international reporting guidelines. To raise their awareness
and help equip issuers with tools for ESG reporting, HKEx sponsored five
free half-day seminars and 10 free full-day workshops between May and
July 2011 based on a draft guide prepared by HKEx. The seminars and
workshops were conducted by external consultants specialising in ESG
reporting. There were 823 participants from 498 issuers at the seminars and
518 participants from 348 issuers attended the workshops. The seminars
and workshops were well received by participants.
To facilitate issuers to start ESG reporting, HKEx’s draft guide, seminar
and workshop materials, frequently asked questions and answers, steps
for reporting and a reporting toolkit are available on the HKEx website.
HKEx also plans to add a list of web links for ESG resources to the HKEx
website. This will serve as an information centre for issuers that would like
to learn more.
On 9 December 2011, HKEx published a consultation paper on ESG
reporting. HKEx proposes to introduce a simple, easy-to-use ESG reporting
guide for issuers. It would complement international disclosure guidelines
and be a first step towards issuers adopting best practices. The main
objectives are to raise awareness and to encourage issuers to start ESG
reporting.
HKEx’s proposed ESG reporting guide is divided into four areas: Workplace
Quality, Environmental Protection, Operating Practices and Community
Involvement. HKEx proposes that the disclosure be recommended best
practice initially. It may consider raising the level of obligation to “comply or
explain”, which is similar to the Corporate Governance Code, in the future.
HKEx proposes to periodically conduct surveys and evaluate the progress
of issuers’ ESG reporting after implementation of the guide.
The consultation paper is available on the HKEx website. The
consultation will end on 9 April 2012.

HKEx Publishes Results of
Review of Listed Issuers’
Financial Reports
The Stock Exchange
published a report in
January 2012 summarising
key observations and
findings from its review
of 100 periodic financial
reports released by listed
issuers.
25 Exchange • January 2012
The Exchange established its Financial Statements Review Programme
in connection with its regulatory function. Under the programme, the
Exchange conducts a review, on a sample basis, of the periodic financial
reports published by issuers. The objective of the programme is to monitor
compliance with the disclosure requirements of the Listing Rules and
accounting standards. To enhance transparency and encourage high
standards of financial disclosure, the Exchange releases key findings and
observations from its reviews on a regular basis.
The report published in January 2012 covered the Exchange’s review of
annual, interim and quarterly reports released by issuers between October
2009 and April 2011. It was the third report since the review programme
was established.
During the review process, the Exchange sent 91 letters to issuers. The
letters contained more than 340 enquiries and observations, including
requests for explanations of possible non-compliance. Where the omitted
disclosures were regarded as less significant or material, the Exchange
obtained written confirmation from issuers that the required information
would be provided in future financial reports.
The results of the review indicated that some disclosures could be improved.
The review found issuers need to pay particular attention to the Listing
Rules on:
• Disclosures relating to significant events, balances and transactions
• Auditors’ remuneration
• Management discussion and analysis
• Disclosures required under the Hong Kong Companies Ordinance
• Connected and related party disclosures
• Corporate Governance Reports
The Exchange encourages directors and other persons responsible for
financial reporting to review their financial reporting systems for possible
improvements and to note the matters discussed in the report to ensure
that useful information is presented in their financial statements.
The report is available at the HKEx website.

New System Streamlines Electronic
Transmission of Correspondence with
Listing Division
To streamline its
information management
process, HKEx’s Listing
Division implemented a
new content management
system in December 2011.
The new system supports
electronic submission
of documents and text
recognition technology,
helping to reduce the
need for hard copies of
documents and making
searches for information
easier.
26 Exchange • January 2012
Under the new system, files and records are maintained electronically
and hard copies of documents are reduced to a minimum. The text
recognition technology and file management tools support a central
information repository which allows the Listing Division to maintain a
centralised knowledge management database.
The division saw the system’s implementation as an opportunity to enhance
its communication with issuers. Since December 2011, it has offered
issuers and other market practitioners a choice of electronic communication
channels. They can use either email or the e-submission system, which
has been upgraded with a simplified document submission channel. While
both channels allow direct and immediate submission of correspondence
to Listing’s case officers, the e-submission channel offers a more secure
channel for issuers.
In addition, HKEx has streamlined the submission of large documents such
as annual reports for publication on the HKExnews website by increasing
the file size limit of documents from 4 megabytes to 10 megabytes. Issuers
submitting large documents for publication can now use the e-submission
channel directly instead of submitting CD-ROMs.
Changes Make e-Submission System More Convenient
As part of a continuing effort to enhance the process for submitting
documents via the e-Submission System (ESS) for listed issuers, HKEx
modified the system in December 2011 to provide users with additional
convenience.
Before the change, an ESS user had to select the relevant headline
category, input the document title and attach electronic copies of the
ready-for-publication documents at the same time during a submission.
The enhancement provides users the option of saving their selected
headline categories and document titles and deferring the document
attachment process. A user who chooses to defer the attachment part
of his or her submission can log on to ESS later, retrieve the previously
saved partial submission and attach the document files to complete the
submission. The option will be very useful when an issuer has to make a
submission and would like to input the headline category and title before
completing the document or proofreading it.
There was no change to the ESS approval system processes. They
remain the same.

HKEx Updates Market on its
Suspension Policy in the Event of a
Service Interruption in its Information
Dissemination System
On 20 December
2011, HKEx issued a
news release to update
the market about its
contingency plans and
trading arrangements in
the unlikely event that its
information dissemination
system is disrupted. The
general policy is that
suspension of trading may
be required if listed issuers
announce price sensitive
information which is not
properly disseminated
in the market because
the services of HKEx’s
information dissemination
system are interrupted.
27 Exchange • January 2012
Publication of Results Announcements
Generally, HKEx does not expect suspension to be necessary if an issuer
releases its results when HKEx’s news dissemination system is disrupted
and not available. Issuers are required to announce board meeting notices
on the HKExnews website and their own websites at least seven days
before the intended date of a board meeting to approve results and/or
declare dividends. Accordingly, investors can make themselves aware
of when results are scheduled to be announced, and they will be able to
visit issuers’ websites to review announced results if HKEx’s information
dissemination system is not available.
For investors’ convenience, HKEx publishes a list of companies’ board
meeting notifications on the HKEx website , the HKExnews website
111 and the bulletin boards at and (primary bulletin boards).
Publication of Other Price Sensitive Information
Issuers may announce other price sensitive information besides results.
Such announcements will be available from issuers’ own websites during
a disruption at the HKExnews website as long as issuers comply with
the Stock Exchange’s information dissemination rules. However, as the
information would not have been anticipated by the market, a notification
about the announcements must be published on HKEx’s primary bulletin
boards so that investors are aware of them and can visit the issuers’
websites to view the announcements. Under this scenario, suspension in
trading may be required if either:
1. issuers have not published their announcements on their own websites;
or
2. HKEx has not published a notification about the announcements on its
primary bulletin boards.

HKEx Updates Market on its Suspension Policy in the Event of a Service Interruption
in its Information Dissemination System
Interruption of Services of the HKExnews Website and the
Primary Bulletin Boards
In the extremely unlikely event that services of the HKExnews website and the primary bulletin boards are
interrupted, HKEx will put a third bulletin board (the New Board) into operation. The address of the New Board
will be announced immediately to the public by news release, electronic news media and other channels as
appropriate.
As there would have been no advanced notice of announcements of price sensitive information excluding results
(PSI ex-results) before the New Board’s website address was widely disseminated, HKEx may impose a half-day
suspension of trading for issuers which announced PSI ex-results before investors were informed of the New Board’s
website address to give them sufficient time to locate the New Board and review the company announcements.
HKEx will inform the market of the New Board’s website address through a news release as soon as practicable.
At least 30 minutes before the start of the first trading session after the beginning of a service interruption involving
the HKExnews website and the primary bulletin boards, HKEx will check whether the New Board’s website
address has been widely disseminated in the media. If HKEx considers that the website address has not been
widely disseminated by that time, it may impose a trading suspension on the securities of issuers which have
announced PSI ex-results.
Service Commitment
HKEx is committed to maintaining continuous service from its information dissemination system. After the malicious
August 2011 hacking attacks on the HKExnews website, HKEx installed a new intrusion protection system to
fend off attack traffic and added more distributed denial-of-service (DDoS) protection services to mitigate the risk
of future DDoS attack.
The HKEx Board has established a review committee to examine HKEx’s IT security and contingency plans with
the aim of preventing additional attacks and enhancing the resilience of the HKExnews website. It is expected
that an external security consultant will be engaged in the first half of 2012 to assist in the review.
28 Exchange • January 2012

HKEx Launches Issuer Services
HKEx recently launched a series of issuer services aimed at increasing the visibility of listed companies and
improving their communication with the investment community.
The services are designed to help listed companies gain additional visibility among investors, who
in turn will have greater awareness of each company’s investment case and commercial activities.
The services also are expected to assist listed companies seeking efficient and cost-effective access
to capital.
The current services include conferences, market open ceremonies and real-time stock prices for company
websites. At a later stage, HKEx will offer referral-based market intelligence and communications services to
enable listed companies to better understand their shareholders and how they are perceived by investors.
Current Services
“Know the Listed Companies” Conferences Series
HKEx will organise conferences at its auditorium periodically to enable representatives of listed companies of
the same industry, sector or theme to give presentations about their companies to market professionals. Upon
confirmation of the conference date, institutional investors, analysts, Exchange Participants and other market
professionals may enrol through the HKEx website. Each conference will include time for questions from the
audience.
Market Open Ceremonies
The ceremonies give representatives
and guests of listed companies a
unique opportunity to step into the
stock market spotlight by striking
a gong at the HKEx Trading Hall
to mark the start of the trading
day. Listed companies can host
a ceremony to mark special
occasions such as the anniversary
of their initial public offering or
another company milestone. Video
clips and photos of the ceremony
will be posted on the HKEx website
and distributed to the media. Participating companies may also post the video and photos on their website.
29 Exchange • January 2012
HKEx Chairman Ronald Arculli (ninth from left) and HKEx Chief Executive Charles Li (ninth from
right) officiate at a market open ceremony to mark the first day of securities trading in 2012.
Real-time Stock Prices for Company Websites
Listed companies can display their real-time stock price on their website through the Basic Market Prices Service
created by HKEx and provided by information vendors. More details can be found on the HKEx website under
the Data Products – Basic Market Prices (BMP) Service section.
Additional information on HKEx’s issuer services can be found on the HKEx website under the Products and
Services – Issuer Services section.

HKEx’s Derivatives Market Gets
Sustained Equal Support from Exchange
Participants and Investors
By Research & Corporate Development Department
The HKEx Derivatives
Market Transaction Survey
2010/11 found that
Exchange Participants’
principal trading and
investor trading sustained
their more or less equal
contribution to HKEx’s
derivatives market
turnover. An increasing
majority of retail investor
trading was online.
30 Exchange • January 2012
HKEx conducts the Derivatives Market Transaction Survey (DMTS) annually
to track trading in its derivatives (futures and options) market by investor
type and purpose. The latest survey covers the major products in terms
of turnover volume — Hang Seng Index (HSI) futures, HSI options, Mini-
HSI futures, H-shares Index (HHI) futures, HHI options, Mini-HHI futures
(launched on 31 March 2008 and covered in the survey for the first time)
and stock options. These products accounted for 99 per cent of the total
turnover volume of the HKEx derivatives market during the study period
(July 2010 – June 2011 1 ). Figure 1 shows the trading volume by product
under study for the five most recent surveys.
Figure 1 Contract volume and percentage of total by product
under study (2006/07 – 2010/11)
Million contracts
Note: Numbers may not add up to 100 per cent due to rounding.
1 Referred to as the year 2010/11 throughout the article; the same convention is used for the
past surveys.

HKEx’s Derivatives Market Gets Sustained Equal Support from
Exchange Participants and Investors
Distribution of Trading by Transaction Purpose
Pure trading and hedging were the two main transaction purposes of derivatives trading in 2010/11. The contribution
of pure trading in 2010/11 was 44 per cent of total market turnover (up from 39 per cent in 2009/10) and that of
hedging was 42 per cent (down from 45 per cent in 2009/10). Arbitrage turnover accounted for 14 per cent of
the overall market turnover in 2010/11, compared to 16 per cent in 2009/10. (See Figure 2.)
In 2010/11, a significant proportion of trading in HHI options (60 per cent) and stock options (50 per cent) was for
hedging, while a significant proportion of trading in the futures products (over 50 per cent) was for pure trading.
(See Figure 2.)
Figure 2 Distribution of derivatives market trading volume by transaction purpose for
overall market and each product (2010/11 vs 2009/10)
Note: Numbers may not add up to 100 per cent due to rounding.
31 Exchange • January 2012

HKEx’s Derivatives Market Gets Sustained Equal Support from
Exchange Participants and Investors
Contribution to Market Trading by Investor Type
In 2010/11, the contribution of different investor types (Exchange Participants’ (EP) principal trading, local retail/
institutional investors and overseas retail/institutional investors) to overall derivatives market trading showed little
change from that in the previous year. (See Figures 3 & 4.)
Turnover in HKEx’s derivatives market was almost equally shared by EP principal trading (comprising market
maker trading and EP proprietary trading) and agency (investor) trading. EP principal trading accounted for 51 per
cent of total market volume (compared to 50 per cent in 2009/10) — 39 per cent from market maker trading (vs
36 per cent in 2009/10) and 12 per cent from EP proprietary trading (vs 14 per cent in 2009/10). The contribution
from overseas investors stood at 23 per cent (20 per cent from institutions) in 2010/11 and was comparable to
24 per cent in 2009/10 and 22 per cent in 2008/09. The contribution from local investors was 26 per cent in
2010/11 (20 per cent from retail and 6 per cent from institutions), similar to the levels in 2009/10 and 2008/09.
(See Figures 3 to 5.)
Figure 3 Distribution of derivatives market trading volume by investor type (in percentage terms)
(2010/11 vs 2009/10)
Notes:
1. Exchange Participants’ principal trading comprises market maker trading and EP proprietary trading.
2. Numbers may not add up to 100 per cent due to rounding.
32 Exchange • January 2012

HKEx’s Derivatives Market Gets Sustained Equal Support from
Exchange Participants and Investors
Figure 4 Distribution of derivatives market trading volume by investor type (2001/02 – 2010/11)
Overall market 2006/07 2007/08 2008/09 2009/10 2010/11
Principal trading 1 55.0 60.6 52.5 49.9 50.7
– Market makers 40.0 49.0 39.9 36.2 38.9
– Proprietary trading 15.0 11.6 12.6 13.7 11.8
Local investors 23.8 20.6 25.4 25.6 26.4
– Retail investors 18.0 17.0 20.2 20.0 20.0
– Institutional investors 5.8 3.6 5.2 5.6 6.4
Overseas investors 21.1 18.8 22.1 24.5 22.9
– Retail investors 2.0 2.0 3.2 3.5 2.5
– Institutional investors 19.2 16.8 18.9 20.9 20.3
Total 100.0 100.0 100.0 100.0 100.0
Notes:
1. Exchange Participants’ principal trading comprises market maker trading and EP proprietary trading.
2. Numbers may not add up to 100 per cent due to rounding.
33 Exchange • January 2012

HKEx’s Derivatives Market Gets Sustained Equal Support from
Exchange Participants and Investors
Figure 5 Distribution of derivatives market trading volume by investor type (local vs overseas)
(2001/02 – 2010/11)
Note: Numbers may not add up to 100 per cent due to rounding.
Trading composition by investor type differed by product. For HSI futures, the contribution from overseas
institutional investors was the most significant — 43 per cent, followed by local retail investors (25 per cent).
For HHI futures, overseas investors contributed the majority of the product’s trading (60 per cent), mainly from
institutions (57 per cent). For Mini-HSI futures and Mini-HHI futures, local retail investors were the dominant
participant type — contributing 49 per cent and 53 per cent respectively; they were followed by EP principal
trading (22 per cent and 31 per cent respectively). For HHI options, EP principal trading was the major contributor
(45 per cent) but local institutional investors’ and overseas institutional investors’ contributions were also significant
(26 per cent and 23 per cent respectively). EP principal trading dominated the turnover of stock options (75 per
cent) and was also the most significant contributor to HSI options (47 per cent); however, the contribution from
local retail investors to these two products was also significant (17 per cent for stock options and 23 per cent
of HSI options). (See Figure 6.)
To summarise, overseas investors (predominantly institutions) were significant contributors to trading in the regular
index futures and much less so in options. Local retail investors were the most significant contributors to trading
in mini-futures and had increased their participation in options trading (mainly in stock options and HSI options)
compared to 2009/10. (See Figure 6.)
34 Exchange • January 2012

HKEx’s Derivatives Market Gets Sustained Equal Support from
Exchange Participants and Investors
Figure 6 Distribution of derivatives market trading volume by investor type for overall market and
each product (2010/11 vs 2009/10)
Notes:
1. Market maker trading and EP proprietary trading are components of EP principal trading.
2. Numbers may not add up to 100 per cent due to rounding.
35 Exchange • January 2012

HKEx’s Derivatives Market Gets Sustained Equal Support from
Exchange Participants and Investors
Contribution to Market Trading by Overseas Investors
Overseas investors contributed 23 per cent of total market trading in 2010/11. Among them, UK investors were
the largest contributing group — 25 per cent of overseas investor trading, the same as in 2009/10. They were
followed by US investors (23 per cent in 2010/11, down from 25 per cent in 2009/10). The contribution from
Singaporean investors ranked third (18 per cent, up from 14 per cent in 2009/10). The contributions from investors
in Continental Europe (Europe excluding the UK) and Mainland China were also significant (16 per cent and 11 per
cent respectively in 2010/11, compared to 14 per cent and 13 per cent respectively in 2009/10). The aggregate
contribution to overseas investor trading from investors in Asia (Mainland China, Singapore, Japan, Taiwan and
the Rest of Asia) was 33 per cent in 2010/11, up from 30 per cent in 2009/10. (See Figure 7.)
Figure 7 Distribution of overseas investor trading volume in derivatives by origin
(in percentage terms) (2010/11 vs 2009/10)
# Reported origins in “Rest of Asia” in 2010/11 are India, Indonesia, Macau, Malaysia, South Korea and Thailand.
* Reported origins in “Others” in 2010/11 are Africa, Bermuda, British Virgin Islands, Canada, Caribbean, Cayman Islands, Liberia, Middle East,
New Zealand and Republic of Seychelles.
Note: Numbers may not add up to 100 per cent due to rounding.
36 Exchange • January 2012

HKEx’s Derivatives Market Gets Sustained Equal Support from
Exchange Participants and Investors
In terms of contribution to total derivatives market trading, UK investors accounted for 6 per cent and US
investors 5 per cent. The volume contribution from investor origins that followed were 4 per cent each from
Singapore and Continental Europe and 3 per cent from Mainland China. (See Figure 8.)
Figure 8 Distribution of derivatives market trading volume by origin
(in percentage terms) (Jul 2010 – Jun 2011)
* Others comprise investors from Australia, Japan, Taiwan, Rest of Asia, and Rest of the World.
Note: Numbers may not add up to 100 per cent due to rounding.
Although the survey did not ask for a breakdown by retail/institutional investors for each overseas origin, a minimum
proportion of retail/institutional investor trading from each origin could be deduced from EPs’ responses. Overseas
investor trading from the US, the UK, Continental Europe, Singapore (over 90 per cent for each), Japan (over 87
per cent) and Australia (over 75 per cent) came predominantly from institutional investors, while at least 65 per
cent of Mainland investor trading came from retail investors.
Changes in Contract Volume by Investor Type
From the percentage contributions obtained from the survey, the implied contract volumes by investor type during
each study period were computed based on the actual volume for the products.
In 2010/11, a year-on-year volume growth of 30 per cent was observed for EP principal trading, 31 per cent for
local investor trading and 19 per cent for overseas investor trading, compared to the 27 per cent increase in the
total derivatives market turnover. Particularly strong growth was observed for local institutional investors (46 per
cent), albeit their turnover was relatively small. Notably, overseas investor trading volume recorded a year-on-year
growth in each of the past ten years.
For overseas investor trading, trading from all the origins under study recorded year-on-year growth in 2010/11,
except Taiwan (down 2 per cent) and Australia (down 62 per cent). In particular, trading from Mainland China
investors continued its year-on-year growth for the tenth consecutive year, even though its overall contribution to
overseas investor trading decreased by two percentage points from 2009/10. (See Figures 9 & 10.)
37 Exchange • January 2012

HKEx’s Derivatives Market Gets Sustained Equal Support from
Exchange Participants and Investors
Figure 9 Implied contract volume of derivatives by investor type (2001/02 – 2010/11)
Million contracts
Year-on-year % change
Type of trade 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11
EP principal trading -25.82% 22.24% 48.70% 6.19% 128.14% 91.57% 105.85% -15.57% -8.30% 29.52%
– Market maker n.a. n.a. 46.72% 5.64% 141.11% 95.95% 128.95% -20.73% -12.30% 36.80%
– Proprietary trading n.a. n.a. 53.01% 7.34% 101.51% 80.79% 44.34% 6.24% 4.31% 10.22%
Local investor trading -2.14% 8.71% 45.13% 4.10% 39.07% 34.75% 61.63% 20.05% -2.47% 31.36%
– Retail -7.66% 21.86% 45.29% -0.29% 42.66% 38.21% 76.70% 15.52% -4.12% 27.35%
– Institutional 11.21% -17.72% 44.65% 17.25% 29.95% 25.07% 15.11% 41.53% 3.91% 45.67%
Overseas investor trading 39.52% 44.77% 35.72% 39.27% 38.84% 48.65% 65.84% 14.77% 6.96% 18.98%
– Retail 272.57% -40.70% 108.07% 28.55% 52.10% 39.87% 88.65% 56.14% 6.22% -8.93%
– Institutional 24.89% 60.77% 30.72% 40.45% 37.51% 49.63% 63.47% 9.81% 7.08% 23.70%
Total -7.11% 21.11% 44.10% 13.12% 70.56% 64.93% 86.86% -2.54% -3.45% 27.41%
n.a.: Not available
Figure 10 Implied contract volume of overseas investor trading in derivatives by origin
(2001/02 – 2010/11)
Million contracts
Year-on-year % change
Overseas origin 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11
US 66.71% 23.07% 36.93% 39.59% -1.90% 110.60% 65.43% -15.50% 41.19% 6.61%
UK & Europe -7.36% 70.40% 27.16% 102.25% 37.97% 18.51% 67.89% 9.63% 5.85% 22.53%
– UK -1.98% 19.16% 56.08% 30.41% 87.33% 39.52% 71.41% 5.88% -7.22% 15.46%
– Europe (excluding the UK) -28.37% 344.19% -14.31% 289.83% -5.14% -17.75% 57.59% 21.58% 42.07% 35.31%
Asia 151.04% 30.85% 49.24% -30.29% 75.63% 41.01% 62.07% 43.19% 31.25% 29.93%
– Japan -46.30% 118.01% 23.79% 55.52% -19.06% 29.61% 43.49% 83.44% 7.39% 4.70%
– Mainland China 145.28% 26.99% 91.35% 5.85% -15.33% 100.38% 96.75% 21.18% 26.16% 2.51%
– Taiwan 1,722.09% -69.92% 20.05% -70.04% 230.00% 109.66% 36.92% 88.74% -20.30% -1.99%
– Singapore* – – 56.14% -60.61% 196.62% 9.19% 34.00% 78.66% 45.59% 56.02%
– Rest of Asia* 155.25% -71.17% -42.14% 10.37% 88.40% 8.39% 38.24% -39.84% 40.38% 109.41%
Australia † – – – – – – – 45.21% -71.05% -61.50%
Others † -27.60% 123.90% 15.46% 50.24% 133.24% 116.73% -75.08% 75.32% -42.30% 107.40%
Total 39.52% 44.77% 35.72% 39.27% 38.84% 48.65% 65.84% 14.77% 6.96% 18.98%
– : Not applicable
* For surveys before 2002/03, Singapore was included in “Rest of Asia”.
† For surveys before 2007/08, Australia was included in “Others”.
38 Exchange • January 2012

HKEx’s Derivatives Market Gets Sustained Equal Support from
Exchange Participants and Investors
Retail Online Trading
Retail online trading as a proportion of total retail investor trading continued to grow in 2010/11, rising to 54 per
cent from 51 per cent in 2009/10. Its contribution to total market turnover was 12 per cent in 2010/11, similar to
the level in 2009/10. Particularly strong growth was observed in retail online trading for stock options — from
31 per cent of retail investor trading in the product in 2009/10 to 40 per cent in 2010/11. (See Figure 11.)
Figure 11 Retail online trading to retail turnover volume and total derivatives market volume
(2001/02 – 2010/11)
Retail online trading by product segment 2006/07 2007/08 2008/09 2009/10 2010/11
Futures and options (excluding stock options)
– As % of total product turnover* 10.4% 15.4% 17.6% 19.1% 18.1%
– As % of total retail investor trading of the products 34.3% 43.7% 49.2% 60.3% 65.0%
Stock options
– As % of total product turnover # 1.1% 0.9% 2.5% 4.8% 7.3%
– As % of total retail investor trading of the products 14.7% 15.2% 22.8% 31.4% 40.4%
* Turnover of products in the segment included in the study – HSI futures and options, HHI futures and options, Mini-HSI futures and Mini-HHI
futures (newly included in 2010/11) – measured by contract volume.
# Stock options turnover measured by contract volume.
The full survey report (English only) is available on the HKEx website.
39 Exchange • January 2012

News Briefs
HKEx’s Results for January – September 2011
HKEx had a profit attributable to shareholders of $3,821 million for the first nine months of 2011 (first quarter:
$1,238 million; second quarter: $1,346 million; third quarter: $1,237 million) compared with $3,478 million
for the same period in 2010 (2010 first quarter: $1,127 million; second quarter: $1,131 million; third quarter:
$1,220 million). Revenue and other income totalled $5,917 million in the first nine months, which was 12 per cent
higher than the same period last year, and operating expenses rose 17 per cent from a year ago to $1,383 million.
The rise in profit for the nine months ended 30 September 2011 against that for 2010 was primarily attributable
to higher turnover-related income resulting from increased activity in the securities and derivatives markets along
with a rise in revenue from Stock Exchange listing fees but they were partly offset by a decrease in net investment
income. Total operating expenses increased over the same period in 2010 mainly due to higher staff costs and
an increase in IT and computer maintenance expenses for services and goods consumed by the Participants.
Financial Highlights (Financial figures are expressed in Hong Kong Dollar)
Nine months ended Nine months ended
30 Sept 2011 30 Sept 2010 Change
KeY MaRKeT STaTiSTicS
Average daily turnover value on
the Stock Exchange ($bn)
Average daily number of derivatives contracts
73.2 63.1 16%
traded on the Futures Exchange
Average daily number of stock options contracts
268,850 212,953 26%
traded on the Stock Exchange 309,104 219,892 41%
40 Exchange • January 2012
Nine months ended Nine months ended
30 Sept 2011 30 Sept 2010
$m $m Change
ReSuLTS
Revenue and other income 5,917 5,291 12%
Operating expenses 1,383 1,178 17%
Profit before taxation 4,534 4,113 10%
Taxation (713 ) (635 ) 12%
Profit attributable to shareholders 3,821 3,478 10%
Basic earnings per share $3.55 $3.23 10%
Diluted earnings per share $3.54 $3.22 10%

News Briefs
Real-time HKEx Share
Price on HKEx Website
HKEx began providing the real-time
price of its shares on the HKEx website
from 7 November 2011 through its Basic
Market Prices, or BMP, Service. The realtime
price and other information such as
shares traded and the previous closing
price are available through the HKEx
website’s Investor Relations section,
which can be accessed via “About
HKEx” on the website’s homepage.
HKEx signs MOU with China Financial Futures Exchange
HKEx and China Financial Futures Exchange (CFFEX) signed a Memorandum of Understanding (MOU) on
cooperation and the exchange of information. The MOU was signed by Charles Li, HKEx Chief Executive, and
Zhu Yuchen, CFFEX President, in Shanghai on 11 January. Yang Qiumei, Head of Mainland Development of HKEx,
was joined by Li Zhengqiang, Hu Zheng and Lu Dongsheng, deputy general managers of CFFEX and other senior
representatives of HKEx and CFFEX to witness the ceremony.
HKEx signs MOU with
Zhengzhou Commodity
Exchange
HKEx and Zhengzhou Commodity
Exchange (ZCE) signed a Memorandum
of Understanding (MOU) on cooperation
and the exchange of information.
The MOU was signed by HKEx Chief
Executive Charles Li and ZCE President
Zhang Fan at a ceremony in Zhengzhou
on 14 November 2011. Other senior
executives from HKEx and ZCE attended
the ceremony to witness the signing.
Best Corporate Governance Disclosure Awards 2011
41 Exchange • January 2012
HKEx Chief Executive Charles Li (seated left) and ZCE President Zhang Fan (seated right) sign
an MOU on cooperation and the exchange of information during a ceremony in Zhengzhou
witnessed by other senior executives from HKEx and ZCE.
HKEx’s annual report received the Platinum Award in the Hang Seng Index Category of the 2011 Best Corporate
Governance Disclosure Awards organised by the Hong Kong Institute of Certified Public Accountants. HKEx was
also joint winner of the sustainability and social responsibility reporting award that the Hong Kong Institute of
Certified Public Accountants introduced in 2011. The awards were presented on 24 November 2011.
Newly Listed Companies
There were 101* companies listed on the Stock Exchange last year, 88* new Main Board listings and 13 new
listings on the Growth Enterprise Market, or GEM. Please refer to “New Listing Report” on the HKExnews website
for details.
* Figures included 12 companies that transferred their listings from GEM to the Main Board

CSR Corner
Highlighting HKEx’s Corporate Social Responsibility Efforts
Starting from this issue of Exchange, this new CSR Corner will be included to communicate HKEx’s Corporate
Social Responsibility information to a wider audience on a quarterly basis. This is one of the initiatives to
facilitate stakeholder engagement under HKEx’s CSR Strategy, which was approved by the company’s
Environmental, Social and Governance, or ESG, Committee in September 2011. HKEx is also committed to
reporting its CSR performance annually in a standalone CSR report. The 2011 CSR Report is scheduled to
be published on the HKEx website in March of this year. Details of HKEx’s CSR approach and performance
are available on the HKEx website.
42 Exchange • January 2012
Work-Life Balance Week
HKEx joined Hong Kong’s Work-Life Balance
Week from 17 to 21 October 2011 to help raise
awareness of work-life balance as a business
issue. To demonstrate its commitment in this area,
HKEx took a number of initiatives throughout the
week, including encouraging employees to leave
the office on time, providing them with fresh fruits,
and organising a lunchtime health talk and exercise
classes to promote employee well-being.
Fundraising to Help the Community
Last year’s HKEx Senior Management Community Shield Football Match,
part of the HKEx 7-a-side Soccer Challenge Cup 2011, was held on
20 November 2011. With dollar-to-dollar matching by HKEx, more than
$102,000 was raised to help the community. In addition, HKEx raised a
total of $70,800 and was second runner-up for the Top Fundraising Award
in the ORBIS-Bupa Moonwalkers 2011 held on 3 December 2011. Over
70 employees and their family members participated in the evening charity
walk to raise funds for ORBIS’ sight saving projects.

CSR Corner
Environmental Education for Employees
An important part of environmental education is to help people appreciate nature and their role in protecting it. For
the first time, HKEx was one of the sponsors of WWF Hong Kong’s annual fundraising event “Walk for Nature”.
On 6 November 2011, about 50 employees and their family members participated in the WWF walk to explore
the rich biodiversity of Hong Kong’s wetlands and take part in bird-watching and various educational activities.
About 50 employees and their family members joined WWF Hong Kong’s fundraising event “Walk for Nature”.
A Different Kind of Christmas: Volunteering to Help the Needy
Partnering with The Urban Peacemaker Evangelistic Fellowship and the Haven of Hope Christian Service, the
HKEx Volunteer Team reached out to the underprivileged and elderly in Hong Kong during the Christmas season
to show them care and support. Over 50 HKEx volunteers took part in home visits and brought gifts, including
winter supplies, to about 100 individuals in need.
HKEx volunteers visited about 100 individuals in need and brought them gifts during Christmas.
43 Exchange • January 2012

Listing Matters
Listing Decisions
Summary
Parties Company A – a Main Board issuer
44 Exchange • January 2012
Target – a company listed on an overseas stock exchange
Offeror – a third party who made a general offer to acquire all the shares in the Target
Issue Whether the Exchange would disregard the consideration ratio for Company A’s
disposal of interest in the Target under the offer and classify it as a major transaction
instead of a very substantial disposal
Listing Rule Main Board Rule 14.20
Decision The disposal was classified as a major transaction
The full text of the case can be found on the HKEx website.
Summary
Parties Company A – a Main Board issuer
The Target – a jointly controlled entity owned by Company A and certain third parties
The Group – Company A and its subsidiaries
Issue Whether the Exchange would accept Company A’s proposed alternative size
tests to classify its disposal of interest in the Target as a discloseable transaction
instead of a very substantial disposal
Listing Rule Main Board Rule 14.20
Decision The Disposal was a very substantial disposal for Company A
The full text of the case can be found on the HKEx website.

Listing Matters
Guidance Letters
Summary
Subject Guidance on business models with significant forfeited income from prepayments
Listing Rules Main Board Rules 8.04 and 8.05(1)
GEM Rule 11.06
Related
Publications
N/A
Author IPO Transactions Department
The full text of the guidance letter can be found on the HKEx website.
Subject
Summary
Disclosure in listing documents for applicants engaged in the restaurant business
Listing Rules Main Board Rules 2.13(2) and 11.07
and
Regulations
GEM Rules 14.08(7) and 17.56(2)
Related
Publications
N/A
Author IPO Transactions Department
The full text of the guidance letter can be found on the HKEx website.
NOTeS TO iSSueRS aND MaRKeT PRacTiTiONeRS
For any questions relating to the Listing Decisions and the Guidance Letters please feel free to contact the Listing
Division.
45 Exchange • January 2012

Compliance Decisions
The Stock Exchange published the following decisions in the fourth quarter of 2011 relating to compliance matters.
Date Action
26 October Public censure of Artini China Co. Ltd. for breaching:
2011 (1) Rules 13.09(1)(c) and 13.09(1)(b) in failing to disclose a licence agreement
with The Walt Disney Company (Asia Pacific Limited) (Disney) and clarify its
relationship with Disney as soon as reasonably practicable (given the absence
of a trading suspension); and
46 Exchange • January 2012
(2) Rule 2.13(2) for publishing a standard announcement on 5 November 2009
which was not accurate and complete in all material respects and was misleading.
7 December Public censure of Playmates Toys Limited for (i) failing to disclose in the Listing
2011 Document dated 31 December 2007 in relation to the listing of its shares on the
Exchange, the significant business deterioration in the fourth quarter of 2007; and
(ii) including in the Listing Document the Directors’ confirmation that “there has been
no material adverse change in our financial or trading position since 30 June 2007”
which was inaccurate given the significant business deterioration in the fourth quarter
of 2007.
Public censure of two current and former Executive Directors for breach of their
respective Undertakings to use their best endeavours to procure that the Company
comply with the Listing Rules.
Artini China Co. Ltd. (company) was publicly censured for breaching Rules 13.09(1)(b), 13.09(1)(c) and 2.13(2)
of the Listing Rules.
On 26 October 2009, Artist Empire Jewellery Mfy. Limited (artist empire), a wholly-owned subsidiary of the
Company, entered into a Licence Agreement with The Walt Disney Company (Asia Pacific) Limited (Disney). Disney
agreed to grant Artist Empire a non-exclusive licence and right to use certain material and trademarks of Disney
characters owned by Disney Enterprise, Inc. for a term of two years.
In the morning of 4 November 2009, the Shanghai municipal government announced that the project to build a
Disneyland in Shanghai (Shanghai Disney) had received state approval (Shanghai Disney News). There was a
significant amount of news coverage in the PRC, Hong Kong and overseas about the project on 4 and 5 November
2009.
On 4 November 2009, the Company’s share price closed at $0.80, an increase of 17.65 per cent from $0.68 on
the previous day, and its trading volume was 47,783,000, being 7.55 times the past 10-day average.
It was widely reported in various press articles in the afternoon of 4 November 2009 and on 5 November 2009
that the Company’s share price increase on 4 November 2009 was attributable to rumours in the market that
the Company had obtained an exclusive licence and manufacturing right for accessories for Shanghai Disney
(Rumours).

Compliance Decisions
Three of these press articles reported that (a) the Company had denied any new cooperation with Disney
(Relationship Denial), (b) it was not aware of any reasons for the significant increase in its share price on
4 November 2009, and (c) it did not have any price sensitive information which required disclosure.
The Company’s share price continued to rise on 5 November 2009 and closed at $0.83, with an increase of 3.75
per cent from the previous day (maximum increase during the day was 13.75 per cent), and trading volume was
60,880,000, being 5.86 times the past 10-day average.
Despite these circumstances, the Company, in response to the Division’s Rule 13.10 enquiry on 5 November 2009
(at 2:56 pm), published an announcement (Standard announcement) on the same day (at 8:30 pm) stating,
among other things, that it was not aware of any reasons for its share price and trading volume increases that
day, and it was not aware of any matter discloseable under the general obligation under Rule 13.09, which was
or might be of a price sensitive nature (Standard confirmation).
The Company’s shareholders and investors continued to trade in the Company’s shares on a misinformed basis until
10 November 2009. The Company disclosed the Licence Agreement by way of an announcement (announcement)
at 5:52 pm on that day.
The market reacted positively to the Announcement. On 11 November 2009, the Company’s share price closed
at $1.12, with an increase of 30.2 per cent from the previous day of $0.86. The highest price recorded that day
was $1.26, representing an increase of 46.5 per cent from the previous day’s closing price. Its trading volume
was 191,444,000, being 11.07 times the past 10-day average.
The Listing Committee concluded that:
(1) As from 4 November 2009, with the substantial change in market sentiment about Disney related
matters brought about by the Shanghai Disney News and in light of the Rumours, the Licence Agreement
(particularly, the fact that the licence granted by Disney was on a non-exclusive basis) was information which
might be reasonably expected materially to affect market activity in and the price of the Company’s shares.
It therefore fell within the scope of and was discloseable under Rule 13.09(1)(c). The disclosure obligation
arose:
(a) by 10:30 to 11 am on 5 November 2009 when the Company’s representatives and an executive director
(eD 1) respectively became aware of the press articles on that day which reported that the Company’s
share price increase on the previous day was attributable to the Rumours (Press articles); or
(b) in the alternative, by 3 pm on 5 November 2009 when another executive director (eD 2) became aware
of these Press Articles.
(2) As a result of the inaccurate reporting in the press regarding the Rumours and the Relationship Denial, the
Company was obliged under Rule 13.09(1)(b) to clarify its relationship with Disney and the nature of the
Licence Agreement, so as to avoid its shareholders and investors trading on a misinformed basis. The disclosure
obligation arose:
(a) at around 10:30 to 11 am on 5 November 2009 when the Company’s representatives and ED 1 respectively
became aware of these Press Articles, and the unusual trading movements in the Company’s shares on
the previous day; or
(b) in the alternative, by 3 pm on 5 November 2009 when ED 2 became aware of the same facts mentioned
in sub-paragraph (1) above.
47 Exchange • January 2012

Compliance Decisions
(3) It was, however, not until 10 November 2009 (at 5:52 pm) that the Licence Agreement was disclosed, and
the Company’s relationship with Disney was clarified by way of the Announcement.
(4) The confidentiality provision in the Licence Agreement prohibited disclosure of the agreement without Disney’s
consent. Nonetheless and in fairness to the shareholders and the public, the Company should have requested
a trading suspension with effect from 5 November 2009 until Disney’s consent could be obtained and a formal
announcement could be made. It did not do so.
(5) There was a delay of four trading days (from 5 to 10 November 2009) before the Company made the relevant
disclosure by way of the Announcement. During this period, the Company allowed trading in its shares to
continue on a misinformed basis. The delay (given the absence of a suspension of trading) in these circumstances
was not reasonable, and the Company failed to disclose the Licence Agreement and clarify its relationship
with Disney as soon as reasonably practicable, as required by Rule 13.09(1). The Company therefore breached
Rules 13.09(1)(c) and 13.09(1)(b).
(6) Information regarding the Licence Agreement was material and might have been relevant to the unusual trading
movements on 5 November 2009, which led to the Division’s Rule 13.10 enquiries on that day. The Company’s
Standard Confirmation rendered the Standard Announcement not accurate and complete in all material
respects, and was misleading. The Company has therefore breached Rule 2.13(2).
(7) The Company has failed to maintain adequate and effective internal controls to ensure its compliance with
Rule 13.09(1) at the relevant time.
The Listing Committee publicly censured the Company for breaching Rules 2.13(2), 13.09(1)(b) and 13.09(1)(c).
It was given to understand that the Company has already or would soon be appointing (a) an independent
professional adviser to review and make recommendations to improve the Company’s internal controls, and (b)
a compliance adviser for consultation on Rule compliance. It reserved the right to direct the Company to make
these appointments should they not be made.
Playmates Toys Limited was publicly censured for its breach of Rules 11.07 and 2.13 for:
(1) failing to disclose in its Listing Document dated 31 December 2007, published in relation to the listing of
its shares on the Exchange, the significant business deterioration in the fourth quarter of 2007 (“Q4 business
deterioration”); and
(2) including the Directors’ confirmation in the Listing Document that “there has been no material adverse change
in our financial or trading position since 30 June 2007”, the date of the latest audited combined financial
results as set out in the Listing Document (the “No change confirmation”) which was inaccurate given the
Q4 business deterioration.
The fourth quarter normally generates approximately 50% of the Company’s annual sales of toys and the United
States is a major market for the Company’s toy products.
48 Exchange • January 2012

Compliance Decisions
The Company’s shares were listed on the Exchange on 1 February 2008. On 10 March 2008, the Company
published its annual results for year ended 31 December 2007 reporting a $34 million net loss which represented
a significant deterioration from the 2006 Annual Results which reported $23 million net profit. The poor 2007
Annual Results were attributed to the decline in the turnover in the United States resulting from factors including
negative customer sentiments with the widely publicized product recalls in the United States in the year, higher
costs of manufacturing in China and lower overall profit margin. Whilst the Listing Document had disclosed factors
and circumstances that would or might adversely affect the Company’s business including the product recalls, the
Listing Document did not disclose the actual and specific Q4 business deterioration resulting from these factors.
Mr Chan Chun Hoo, Thomas (“Mr Chan”), current Executive Director of the Company and Mr Novak, Lou Robert
(“Mr Novak”), former Executive Director of the Company retired on 28 May 2010, breached their Undertakings to
use their best endeavours to procure the Company’s compliance with the Listing Rules by reason of:
(1) their failure to procure preparation of the Company’s management accounts to October and November
2007 respectively or otherwise procure specific updated information of the Group’s actual business and
financial performance for consideration and decision on Listing Document disclosure; and
(2) their making the No Change Confirmation on the basis of outdated financial information as of 30 September
2007.
The Listing Committee (at first instance) at the hearing on 26 October 2010 made the findings of breaches as set
out above and imposed public censure against the Company, Mr Chan and Mr Novak.
At the disciplinary (review) hearing held on 19 April 2011, the Listing Committee endorsed the decision reached
and the sanction imposed on the Company, Mr Chan and Mr Novak by the Listing Committee at first instance.
At a hearing held on 17 November 2011, the Listing Appeals Committee upheld the sanction of public censure
imposed on the Company, Mr Chan and Mr Novak.
The full text of the statement can be found on the HKEx website.
49 Exchange • January 2012

HKEx Market
Surveillance Highlights
Under the Memorandum of Understanding (MOU) between the Securities and Futures Commission (SFC) and HKEx
on matters relating to market surveillance, HKEx refers suspected violations of Hong Kong’s ordinances to the
SFC from time to time. The MOU also established arrangements for HKEx to refer to the SFC suspected violations
of the codes, rules and regulations made by the SFC relating to HKEx’s securities and derivatives markets. The
purpose of the referrals is to bring the situations to the SFC’s attention for possible criminal prosecution and/or
disciplinary action against licensed persons under its jurisdiction in respect of market misconduct matters.
The latest referral figures are in the table below.
Exceptional Price/Market Movement Cases Referred to the SFC
Three Months to Three Months to
30 September 2011 31 December 2011
cases* ePs involved** cases* ePs involved**
Securities Market:
Pre-opening Sessions – – – –
Trading Sessions 1 1 3 3
Total 1 1 3 3
* A case is defined as an instance of exceptional order/trade activity which has been identified and investigated by HKEx and resulted in HKEx
referring the details of the investigation analysis and related documentation to the SFC for its further review and consideration in relation to the
SFC’s enforcement responsibilities.
** EPs – Abbreviation for Exchange Participants.
50 Exchange • January 2012

Status Report on New Product and
Market Development Initiatives
Initiatives are subject to change and may require broad market support and/or regulatory approval before they
can be implemented. HKEx will announce further details of these initiatives as they progress.
initiative Status on 24 October 2011 Status on 16 January 2012
1
2
3
Possible changes to
the Requirements for
Overseas companies
Seeking Listings in
Hong Kong, including
those Seeking Secondary
Listings
consultation Paper on
Review of the code on
corporate Governance
Practices and associated
Listing Rules
consultation on the
Placing of Shares at
initial Public Offering
(iPO) and Pre-iPO
investments
51 Exchange • January 2012
HKEx has been conducting
soft consultations with market
practitioners and is considering the
feedback received.
The consultation conclusions and
proposed Rule amendments are
scheduled to be published on 28
October 2011.
HKEx is considering whether to
issue a consultation paper.
HKEx is working closely with the
Securities and Futures Commission
(SFC) with a view to releasing a
consultation paper within a few
months. The objectives are to clarify
and streamline the requirements
for listing overseas companies
and to provide a disclosure-based
approach to secondary listings of
seasoned issuers from reputable
overseas exchanges.
The consultation conclusions were
published on 28 October 2011.
Most Rule amendments took effect
on 1 January 2012; Corporate
Governance Code and certain
Rules will become effective on
1 April 2012.
HKEx organised a series of 10
free seminars in November and
December 2011 to provide training
and practical guidance on Listing
Rule amendments on corporate
governance and practical issues
relating to Rule compliance. One
of the seminars has been recorded
and posted on HKEx website as a
webcast.
In January 2012, HKEx presented
the same seminar in Putonghua in
Hong Kong, Shanghai and Beijing.
One of the Putonghua seminars
has also been posted on the HKEx
website as a webcast.
At the moment, the interim guidance
issued by the Listing Committee
appears to be well understood and
accepted by market participants.
HKEx will monitor developments
carefully to see if further guidance
is needed.

initiative Status on 24 October 2011 Status on 16 January 2012
4
5
6
7
Status Report on New Product and Market Development Initiatives
Reporting on
environmental and
Sustainability issues
Simplification of
Prospectuses and Related
Documents
Study on after-hours
Derivatives Trading
exploration of
New Financial
Products/Services and
Review of existing
Products/Services
52 Exchange • January 2012
Materials from HKEx’s seminars and
workshops on environmental, social
and governance (ESG) reporting
together with the frequently asked
questions were posted on HKEx
website.
HKEx will publish guidance letters
on the simplification of the summary
section of prospectuses and the
application forms in due course.
HKEx has completed the analysis
of the comments it received on its
consultation paper on after-hours
derivatives trading and will publish
the consultation conclusions in due
course.
Volatility index-related Products
The Securities and Futures
Commission (SFC) approved the
proposed Rule amendments for HSI
Volatility Index (VHSI) futures. HKEx
is assessing the market readiness
for trading VHSI futures and will
announce the launch date in due
course.
RMB-traded Stock Options
The SFC approved the proposed
Rule amendments for RMB-traded
stock options. HKEx has asked its
Participants to prepare for readiness
to trade RMB-traded futures and
options. The RMB readiness test
is tentatively scheduled in January
2012.
A consultation paper on the
draft ESG Reporting Guide was
published on 9 December 2011
and the deadline for replies is 9
April 2012.
HKEx published a guidance letter,
GL 27-12, on the HKEx website on
12 January 2012 to give guidance
on how to draft the “Summary and
Highlights” section of prospectus in
a way that is concise, easy to read
and in plain language.
On 15 December 2011, HKEx
p u b l i s h e d t h e c o n s u l t a t i o n
conclusions and announced its
plan to introduce after-hours
derivatives trading. The target for
implementation is the second half
of 2012.
VHSI futures will commence trading
on 20 February 2012. HKEx is rolling
out educational and marketing
activities for VHSI futures.
The RMB readiness test for
Exchange Participants and
Clearing Participants was held
on 14 January 2012. (Please see
related article on page 14)

initiative Status on 24 October 2011 Status on 16 January 2012
8
9
Status Report on New Product and Market Development Initiatives
10
11
consultation on a
Scripless Securities
Market
Derivatives Market
System capacity and
Technology upgrade
Securities Market
System capacity and
Technology upgrades
(also known as aMS/3.8
and MDS/3.8)
Hosting Services
53 Exchange • January 2012
The drafting of the consultation on
the new subsidiary legislation under
the SFO is in progress.
User Acceptance testing is near
completion and production rollout
is scheduled for end of 2011.
Three rounds of market rehearsals
were successfully completed as
of 24 October 2011, with more
than 95 per cent of Exchange
Participants and information vendors
participating. Production rollout is
scheduled for December 2011.
HKEx will offer Hosting Services
at its Next Generation Data
Centre. HKEx plans to offer access
to its securities market from the
fourth quarter of 2012, access to its
derivatives market from the second
quarter of 2013 and access to its
clearing and settlement systems
from the fourth quarter of 2013.
The Scripless Securities Market
Working Group has completed its
study of the operational details of
the proposed model which will form
the basis for the SFC’s consultation
on the new subsidiary legislation
under the SFO in 2012.
The upgrade was implemented on
12 December 2011.
The upgrades were implemented
on 5 December 2011.
HKEx has been developing the
operational model and service
offerings of Hosting Services
to prepare for service launch in
2012. Total capacity of the hosting
floors inside the new HKEx Data
Centre can support up to 1,200
equipment cabinets; Phase 1 of
around 320 cabinets will be made
available to Exchange Participants,
information vendors, technology
and communications providers,
which will be able to interact within
the ecosystem, in the fourth quarter
of 2012.

Status Report on New Product and Market Development Initiatives
initiative Status on 24 October 2011 Status on 16 January 2012
12
13
establishment of
clearing House for
Over-the-counter (OTc)
Derivatives Traded in
Hong Kong
Next Generation Market
Data System (NGMDS)
Abbreviations: HSI – Hang Seng Index; RMB – renminbi.
Notes:
AMS/3, the Third Generation Automatic Order Matching and Execution System, is the trading system for the securities market. CCASS/3, the
Latest Generation Central Clearing and Settlement System, and the Market Data System, or MDS, are the other major market systems supporting
the securities market. HKATS, the Hong Kong Futures Automated Trading System, is the trading system for the derivatives market. DCASS, the
Derivatives Clearing and Settlement System, and PRS, the Price Reporting System, are the other major market systems for the derivatives market.
Information may be added after the date at the top of the column.
54 Exchange • January 2012
HKEx has established two new
departments, the OTC Clearing
Operations Department and the
OTC Clearing Risk Management
Department, to be responsible for
the OTC clearing business. HKEx
completed the platform selection
process and will commence
implementation work in November
2011. The Treasury Markets
Association Sub-group on Central
Counterparty (CCP), co-chaired by
HKEx and the International Swaps
and Derivatives Association, held its
first working group meeting in late
September 2011. The sub-group
is an industry forum to provide
market input on business and
risk management issues relating
to the development of the CCP in
Hong Kong for OTC derivatives.
HKEx will start reach out individual
financial institutions and licensed
corporations to seek their input
and ascertain their interest to
become Clearing Participants in
the coming months. The Hong
Kong Monetary Authority and the
SFC have been developing the
regulatory framework for the OTC
derivatives market in Hong Kong
and they published a consultation
paper on key concepts of the
proposed regime in October 2011.
HKEx aims to begin confirming
connectivity with its planned OTC
derivatives clearing system in the
middle of 2012.
Not included in this issue.
HKEx responded to the consultation
on legislative amendments. System
implementation has started and the
risk management and operations
models are being finalised.
HKEx is also engaging potential
Participants.
HKEx has begun developing a new
market data system to consolidate
the market data distribution for all
HKEx’s asset classes through a single
platform. The NGMDS is targeted to
be rolled out in HKEx’s securities
market in around mid-2013.

Hong Kong Exchanges and Clearing Limited
12/F, One International Finance Centre,
1 Harbour View Street, Central, Hong Kong
Tel +852 2522 1122 Fax +852 2295 3106
Website www.hkex.com.hk Email info@hkex.com.hk