Richard WilliamsHead of Listing31 May 2007

Strengthening Hong Kong as China’s International Capital Formation Centre

Introductory Remarks to Panel Discussion

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1. Complete GEM review and related market development – The review of GEM will be taken forward and the proposals subjected to market consultation and subsequently implemented, as appropriate.

2. Open the equity listing regime to issuers from overseas jurisdictions – HKEx will facilitate the listing of issuers from a broader range of jurisdictions than at present, and promote this in overseas markets.

3. Improve the Exchange’s service standards in the listing process – HKEx seeks to streamline the listing process to facilitate listing

on our markets.

HKEx Strategic Plan 2007-09: Key Listing Initiatives

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AIM model not considered suitable for Hong Kong today:

• Structural differences exist

• Too early to adopt this model

Key Features of Proposals for further development of GEM as Second Board:

• New quantitative admission criteria:– Aggregate Operating Cash flow of HK$20million over last two years– Minimum Market Capitalisation of HK$100million

• Alignment of continuing obligations between GEM & Main Board

• The power to approve GEM admissions be delegated to the Listing Division

• Streamline the transfer process of qualified GEM applicants to the Main Board

GEM Review

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Opening the Equity Listing Regime

Overview of companies listed on the Exchange by place of incorporation (as at 30 April 2007)    % of Market capitalisation* % of

Country Number total (HK$) total

Australia 1 0% 7,024,639,702 0%

Bermuda 458 39% 1,562,371,887,179 11%

Canada 1 0% - 0%

Cayman Islands 386 33% 1,490,303,776,166 10%

England 2 0% 2,007,644,637,686 14%

Hong Kong 195 16% 5,788,050,059,034 41%

PRC 143 12% 3,391,543,399,651 24%

Total 1,186 100% 14,246,938,399,418 100%

*Foreign companies and stock suspended over 1 year are excluded

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Clarify the Listing Rules governing the listing of overseas companies.

Provide a roadmap to overseas companies incorporated outside the Recognised Jurisdictions (i.e. Bermuda, Cayman Islands and the People’s Republic of China as prescribed in the Listing Rules).

State factors affecting eligibility for listing.

Joint Policy Statement – 7 March 2007

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1H 2006

2H 2006

• Average waiting period before Listing Committee Hearing for 2H 2006 decreased by 6 weeks from 18 weeks in 1H 2006 to 12 weeks in 2H 2006.

• The reduction in average waiting period in 2H 2006 is primarily due to

(i) the shortening of the waiting period to Internal Clearance Meeting;

(ii) a decrease in lag time between Internal Clearance Meeting and Listing Committee Hearing from 4 weeks in 1H 2006 to 1 week in 2H 2006;

(iii) the resolution of all the three outlier cases brought forward from 2005 to 1H 2006;

(iv) the introduction of the “internal 70-day protocol” in September 2006.

Waiting Periods at HKEx Prior to Listing Committee Hearing in Jan-Jun 2006 VS SEC Listings in 2006

0

2

4

6

8

10

12

Number of weeks elapsed

Ap

pli

cati

on

at

HK

Ex

0

2

4

6

8

10

12

14

16

18

20

Ap

pli

ca

tio

n a

t S

EC

Application at HKEx (Count=33) SEC in 2006 (Count=198)

Appl ication at HKE x (Count=33) 0 0 2 0 0 0 0 0 2 0 1 2 2 3 1 4 1 0 2 0 1 1 1 0 1 1 1 1 1 1 1 0 1 1 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0

SE C in 2006 (Count=198) 0 2 7 13 1 2 0 0 2 2 3 8 11 18 12 18 11 9 12 5 12 6 5 4 3 3 0 4 3 1 4 2 2 1 0 0 1 0 0 0 1 1 0 0 0 1 1 2 0 0 0 5

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 >50

Average - 18 weeksMedian - 15 weeks

Waiting Periods at HKEx Prior to Listing Committee Hearing in Jul-Dec 2006 VS SEC Listings in 2006

0

2

4

6

8

10

12

Number of weeks elapsed

Ap

pli

cati

on

at

HK

Ex

0

2

4

6

8

10

12

14

16

18

20

Ap

plic

atio

n a

t S

EC

Application at HKEx (Count=42) SEC in 2006 (Count=198)

Appl ication at HKEx (Count=42) 0 0 1 0 0 1 1 1 2 3 6 5 3 7 3 2 0 3 1 0 1 0 0 0 1 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

SE C in 2006 (Count=198) 0 2 7 13 1 2 0 0 2 2 3 8 11 18 12 18 11 9 12 5 12 6 5 4 3 3 0 4 3 1 4 2 2 1 0 0 1 0 0 0 1 1 0 0 0 1 1 2 0 0 0 5

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 >50

Average - 12 weeksMedian - 12 weeks

Time to Listing Committee Hearing

Improving the Exchange’s service standards in the listing process

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• Time spent with HKEx was generally longer than time spent with issuers across all three categories of market capitalisation in 2006. This can be explained by the fact that there was always a minimum period (approx. 3 weeks) for the Listing Division to prepare to the first comment letter.

2006

1H 2006 2H 2006Split of Processing Time at HKEx by Estimated Market Cap Jan-Jun 2006

(Count of large cap = 19)(Count of medium cap = 4)

(Count of small cap = 8)

67

88 87

42

127

75

0

20

40

60

80

100

120

140

160

Avg

. day

s p

rio

r to

list

ing

co

mm

itte

e h

eari

ng

Spent w ith HKEx listing division 67 88 87

Spent w ith issuers 42 127 75

Large(>HK$1000mil)Medium(<=HK$1000mil &

>HK$400mil)Small(<=HK$400mil)

Time spent (HKEx/Issuers) ratio 1.60 0.69 1.16

Split of Processing Time at HKEx by Estimated Market Cap Jan-Dec 2006(Count of large cap = 50)

(Count of medium cap = 9)(Count of small cap = 12)

5974

83

32

7466

0

20

40

60

80

100

120

140

160

Avg

. d

ays p

rio

r to

lis

tin

g c

om

mit

tee

heari

ng

Spent w ith HKEx listing division 59 74 83

Spent w ith issuers 32 74 66

Large(>HK$1000mil)Medium(<=HK$1000mil &

>HK$400mil)Small(<=HK$400mil)

Time spent (HKEx/Issuers) ratio 1.84 1.00 1.26

Split of Processing Time at HKEx by Estimated Market Cap Jul-Dec 2006(Count of large cap = 31)

(Count of medium cap = 5)(Count of small cap = 4)

5462

75

26 33

50

0

20

40

60

80

100

120

140

160

Avg

. d

ays p

rio

r to

lis

tin

g c

om

mit

tee

heari

ng

Spent w ith HKEx listing division 54 62 75

Spent w ith issuers 26 33 50

Large(>HK$1000mil)Medium(<=HK$1000mil &

>HK$400mil)Small(<=HK$400mil)

Time spent (HKEx/Issuers) ratio 2.08 1.88 1.50

The Split of Processing Time Prior to Listing Committee Hearing

Improving the Exchange’s service standards in the listing process