If clients conduct bond trading activities, please visit the following website for details:

As part of the continuing efforts to enhance transparency and awareness of our rules and regulations, the Exchange is issuing guidance on investor eligibility requirements (add cross reference no.1) on the trading of (1) ChiNext shares and STAR shares, (2) debt securities under Chapter 37 of the Main Board Listing Rules (“Ch.37 Bonds”), and (3) SPAC Shares and SPAC Warrants under the Rules of the Exchange (“Rules”). 

Based on a recent review of the Ch.37 Bonds activities in the market, it was observed that most transactions took place off-exchange, and were often conducted on a back-to-back principal basis1. While a majority of the Exchange Participants (“EPs”) (including CMS HK) reviewed have already adopted control arrangements to ensure only orders from those who are eligible are accepted (which include assessing their clients’ status to see if they qualify as an individual professional investor, a corporate professional investor or an institutional professional investor, and that when an intermediary broker is involved, its underlying clients are also eligible), EPs (including CMS HK) generally assumed that these control arrangements are only required to cover those investors with whom they have contractual relationships.

In this regard, the Exchange would like to draw EPs’ (including CMS HK) attention to the following: 

Rules 14A06(14)(a) and 14B06(17)(a) respectively specify that only institutional professional investors are allowed to buy or sell STAR shares and ChiNext shares; 

Rule 525A(1) specifies that only professional investors are allowed to buy Ch.37 Bonds; and 

Rule 592 specifies that only professional investors are allowed to buy SPAC Shares and SPAC Warrants. 

As a guiding principle, EPs (including CMS HK) should observe that only eligible investors are allowed to transact in the relevant securities as prescribed in the Rules. In addition, CMS HK is obliged to ensure that any counterparty they transact with through manual trade also fulfils the relevant eligibility requirement, or when such counterparty is an intermediary, to require such counterparty to ensure that its underlying investor is also eligible. Any EP (including CMS HK) which fails to comply with the relevant investor eligibility requirements may be liable to potential action by the Exchange, including fines or disciplinary proceedings.

Investor eligibility requirement for trading Bonds or SPAC or ChiNext/STAR

Clients or intermediary clients (Intermediary broker with underlying clients) of CMS HK have the obligation to ensure the Professional Investor (PI) status (as defined in Part 1 of Schedule 1 to the Securities and Futures Ordinance) of subject account held with CMSHK or their underlying clients (if any) are valid. Clients of CMS HK are responsible to verify and ensure that their underlying clients are qualified Professional Investors and they are eligible to participate in Ch.37 bond market trading and/or SPAC and/or ChiNext/STAR. In the case where ineligible position(s) under the subject accounts is/are identified, CMSHK has full and absolute discretion to unwind or request client to unwind respective positions as soon as practicable for Ch.37 bond market trading and ChiNext/STAR trading and within 3 days of the settlement of SPAC trading. Any dispute and consequences will subject to the final advice upon legal review on case by case basis. Also, CMS HK will follow the SFC regulatory requirements on suitability at pre-trade level.  Please visit the following website for details.

HKEx Circulars on investor eligibility requirement issued on 12 December 2021 (Ref No. MSM/014/2021), 1 March 2022 (Ref No. MSM/001/2022) and 31 March 2022 (Ref No. MSM/002/2022).

1. Back-to-back transactions refers to those transactions where an Exchange Participant, after receiving: (a) a purchase order from an investor, purchases an investment product from a third party and then sells the same investment product to the investor; or (b) a sell order from an investor, purchases an investment product from the investor and then sells the same investment product to a third party; and no market risk is taken by the licensed or registered person.

2. EPs are reminded that manual trade is not allowed under China Connect Northbound Trading. As stipulated in Rules 1403 and 1416, a CCEP must input China Connect orders into the CSC via a China Connect Central Gateway session connected with its BSS, which are to be routed to a China Connect Market for automatic matching and execution. 

3. EPs should note the amendments to the Rules of the Exchange and the Disciplinary Procedures of The Stock Exchange of Hong Kong Limited announced in December 2021 in the circular (Ref. No. LSD/091/2021).