Hong Kong Regulations

SECURITIES AND FUTURES (SHORT SELLING AND SECURITIES BORROWING AND LENDING (MISCELLANEOUS)) RULES - SECT 3

Classes of transactions to which section 170(3)(e) of the Ordinance not to apply

(1) The following classes of transactions are prescribed for the purposes of
section 170(3)(e) of the Ordinance-

   (a)  a sale by a Monetary Authority-appointed Market Maker of any of the
        following securities-

        (i)    Exchange Fund Bills;

        (ii)   Exchange Fund Notes; or

        (iii)  specified instruments;

   (b)  a sale by an agent of a Monetary Authority-appointed Market  Maker of
        any of the following securities-

        (i)    Exchange Fund Bills;

        (ii)   Exchange Fund Notes; or

        (iii)  specified instruments, where the agent is acting in such
               capacity and believes and has reasonable grounds to believe
               that his principal is a Monetary Authority-appointed 
               Market Maker of the security sold;

   (c)  a sale of securities effected in the course of conducting jobbing
        business.

(2) The following sales of securities shall be regarded as a sale of
securities in the course of conducting jobbing business-

   (a)  the sale of a listed security ("A") by a Securities Market  Maker for
        the purpose of hedging the risks of a position previously acquired in
        another listed security ("B") and-

        (i)    A is a component of B or vice versa; or

        (ii)   where both A and B have a security as a common component;

   (b)  the sale of a listed security ("C") by a Futures Market Maker for the
        purpose of hedging the risks of a position previously acquired in-

        (i)    a futures contract in respect of C or an index of securities
               which includes C; or

        (ii)   a futures contract in respect of another security ("D") where D
               has a common component with C; or

   (c)  the sale of a listed security by a Securities Market Maker in
        performing market making or liquidity providing activities in respect
        of such security, where the Securities Market Maker acquires the right
        to vest such security in the purchaser before the end of the trading
        day following the day of the sale.

(3) In this section, "listed" (上市) means listed or admitted to trading on
a recognized stock market operated by the Stock Exchange Company.

"listed" (上市)