Member Article

In November 2004 the Hong Kong Securities and Future Commission (SFC) published its Consultation Conclusions on the Regulatory Framework for Addressing Analysts’ Conflicts of Interest and issued guidelines to form part of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (Code of Conduct) which are scheduled to come into effect on 1 April 2005. Key changes include the following: a) Scope of application: the guidelines will only cover shares, stock warrants or options listed in Hong Kong; b) Limitations on dealing by analysts: the trading blackout period for analysts has been extended from one to three business days; c) Analyst disclosure of relevant financial interests: a narrower definition for “associate” has been adopted; d) Disclosure by firms of relevant financial interests: the triggering threshold is now 1% of the market capitalisation of the issuer and the $5 million monetary threshold has been dropped; e) Analyst media appearances: an analyst will be required to disclose (i) his name, (ii) licence status, and (iii) any financial interest in the covered securities when making media appearances.