Hong Kong
Stock Exchange Market
In 1891 the first formal securities market, the Association of Stockbrokers
in Hong Kong, was established. A few decades later it was renamed the
Hong Kong Stock Exchange (HKSE) or the Stock Exchange of Hong Kong (SEHK).
A second exchange, the Hong Kong Stockbrokers' Association was opened
in 1921. The two exchanges merged to form the Hong Kong Stock Exchange
in 1947.
The HKSE also merged with other four national exchanges in the end of
the 20th century. The new exchange started trading through a computer-assisted
system on 2 April 1986.The unified exchange had 570 participating organizations.
In 1993, the Exchange launched the Automatic Order Matching and Execution
System (AMS) that was replaced by the third generation system (AMS/3)
in October 2000. The new system enabled the exchange participants to trade
from their offices.
The HKSE launched its traded stock options market in 1995. The first stock
option was on HSBC Holdings plc. In 1999, the HKSE opened the Growth Enterprise
Market (GEM) that made the access to the capital market easier for riskier
businesses. After a year, the Growth Enterprise Index (GEI) was launched.
Finally, the Stock Exchange of Hong Kong together with Hong Kong Futures
Exchange Ltd. established in 1976 and Hong Kong Securities Clearing Company
Ltd. incorporated in 1989 merged to form a unified company Hong Kong Exchanges
and Clearing Limited (HKEx) in 2000. Shares of the HKEx were listed on
the Stock Exchange of Hong Kong with a stock code of 388.
Reports of securities trading in Hong Kong date back to the mid-19th
century. However, the first formal market, the Association of Stockbrokers
in Hong Kong, was not established until 1891. The Association was re-named
the Hong Kong Stock Exchange in 1914. A second exchange, the Hong Kong
Stockbrokers' Association was incorporated in 1921. The two exchanges
merged to form the Hong Kong Stock Exchange in 1947 and re-establish
the stock market after the Second World War.
Pressure to strengthen market regulation and to unify the four exchanges
led to the incorporation of the Stock Exchange of Hong Kong Limited
in 1980. The four exchanges ceased business on 27 March 1986 and the
new exchange commenced trading through a computer-assisted system on
2 April 1986. Prior to the completion of the exchange merger in March
2000, the unified stock exchange had 570 participant organizations.
Hong Kong Growth Enterprise Market
GEM operates on the philosophy of "buyers beware" and "let
the market decide" based on a strong disclosure regime. Its rules
and requirements are designed to foster a culture of self compliance
by listed issuers and sponsors in the discharge of their respective
responsibilities. The following major features are to support this philosophy:
1) No requirement on lowest profit gained. The company should show that
it has a two-year active business record. The stock value at IPO should
reach HK$46 m.
2) A clear statement of the company¡¯s mission. The missions have to
be listed and achieving methods have to be explained.
3) The principle of ¡®buyers beware¡¯. The investors should understand
the market clearly.
4) Two non-executive directors. The two executive directors are usually
responsible for supervision but not business management.
5) Greater, More Frequent and Timely Disclosure.
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