Price-sensitive data bill to be gazetted

June 22, 2011

The Securities & Futures (Amendment) Bill 2011 will be gazetted June 24 and tabled at the Legislative Council on June 29.
 
Its main objectives are to oblige listed corporations to disclose price-sensitive information, to allow the Securities & Futures Commission to institute proceedings before the Market Misconduct Tribunal, and to enable the commission to establish an Investor Education Council.
 
The Financial Services & the Treasury Bureau said today a civil statutory price-sensitive information disclosure regime will help promote a continuous disclosure culture among listed corporations to enhance market transparency and quality, to bring the regulatory regime for listed corporations more in line with other international financial centres, and to enhance Hong Kong’s strength as a premier capital formation platform.
 
Under the bill, a listed corporation is required to disclose price-sensitive information as soon as reasonably practicable after it has become aware of the data. If a listed corporation has breached the disclosure requirement, an officer will also be in breach if the corporation’s breach is a result of his intentional, reckless or negligent conduct; or he has not taken all reasonable measures to ensure that proper safeguards exist to prevent the breach.
 
The bill proposes borrowing the concept of “relevant information” currently used in the “insider dealing” regime in the Securities & Futures Ordinance as the definition of price-sensitive information. In other words, price-sensitive information will be the same set of information currently prohibited from being used for dealing in the securities of the listed corporation concerned.
 
To strike a reasonable balance between ensuring market transparency and safeguarding the legitimate interests of listed corporations in preserving certain information in confidence to facilitate their operation and business development, the bill will provide specified safe harbours.
 
The bill proposes imposing civil sanctions on listed corporations and their officers if they breach the statutory disclosure requirement, and that the Market Misconduct Tribunal handle alleged breaches.
 
The bill also proposes empowering the commission to institute proceedings before the tribunal directly to allow for a streamlined process to enforce the statutory disclosure requirement.
 
In addition, for the existing six types of market misconduct stipulated in the Ordinance, the Bill also proposes the commission can institute proceedings before the tribunal directly, subject to the consent of the Secretary for Justice.