What Hong Kong listed companies need to note when Severe Weather Trading of Hong Kong Securities is implemented

Rossana Chu • 30 July 2024

Rossana Chu

Partner, Hong Kong

What Hong Kong listed companies need to note when Severe Weather Trading of Hong Kong Securities is implemented

Background

Hong Kong Exchanges and Clearing Limited announced that, from 23 September 2024 onwards, the Hong Kong's securities and derivatives markets will remain open and maintain normal operations in a digital and remote manner during severe weather conditions.

Due to its geographical location, Hong Kong is affected by typhoons and rainstorms almost every year, especially in summer. During the more serious instances, most government services are suspended, and schools, offices and businesses are closed. Currently, when “Typhoon Signal No. 8” or above is hoisted or after a “Black Rainstorm Warning” or an “Extreme Conditions” announcement is made by the Hong Kong government (“Severe Weather Conditions”), the securities and derivatives markets are halted.

Over time, the Hong Kong financial markets have developed digital and online facilities which proved to be robust during the COVID closure times. The city has the condition to keep the securities and derivatives markets open for trading during Severe Weather Conditions (“Severe Weather Trading”).

Key Features of Severe Weather Trading

During a day with Severe Weather Conditions:

Under the Severe Weather Trading arrangements, trading, clearing and settlement services and operations in both the securities and derivatives markets (covering equity securities, debt securities, investment vehicles, exchange-traded products, structured products, futures, and options) will continue.
The Northbound and Southbound trading of securities under the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connects will also continue.
In terms of IPO, the new listing and the first day of trading of new securities can also proceed as usual.
Full market data dissemination will be maintained, ensuring that market participants have access to essential information without disruption.
Hong Kong banking services will be provided to facilitate Severe Weather Trading but only through electronic channels. But bank branches will close as is the case now, given the importance of protecting the safety of staff and customers of financial institutions.

Impacts on Corporate Actions of Hong Kong Listed Companies

The following table illustrates the differences in dealing with corporate actions of a Hong Kong listed company before and after the implementation of Severe Weather Trading. Please note that not all deadlines for the corporate actions will change.

Continuing Obligation of Listed Companies

After the implementation of Severe Weather Trading arrangements, a day with Severe Weather Conditions will still be regarded as a “business day”. Thus, listed companies must comply with obligations imposed by the Listing Rules that refer to “business day” even on days with Severe Weather Conditions. There will no longer be an automatic extension of time for compliance, as in the current practice.

In particular, the deadlines for corporate communications will not be extended due to Severe Weather Conditions, including those for:

disclosure of information by way of announcements (including annual and interim results announcements), circulars, notices and returns.
submission of documents, notifications or returns to the Stock Exchange of Hong Kong Limited (“SEHK”).

The Listing Division of the SEHK will continue its operations and receive electronic submissions from the listed companies on days with Severe Weather Conditions.

Next Steps

Hong Kong Exchanges and Clearing Limited will in due course publish relevant rule changes and guidance materials on other details of the Severe Weather Trading arrangements.

Listed companies should get themselves prepared to comply with their Listing Rules obligations during days with Severe Weather Conditions, including:

Discuss with the relevant employees who are expected to continue their work.
Formulate and execute infrastructure upgrades to enable remote work arrangements for the relevant employees.
Alert the directors that they should stand by to sign off corporate communications.
Assess the essential external services required from, e.g. printer, legal advisers, auditors and financial advisers.

YYC Legal LLP is in Association with East & Concord Partners (Hong Kong) Law Firm.

This material has been prepared for general informational purposes only and is not intended to be relied upon as professional advice. Please contact us for specific advice.