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HKEx defers implementation of "blackout" trading rules amid controversy
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08:14, December 31, 2008

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The Stock Exchange of Hong Kong Limited (HKEx) decided Tuesday to defer implementation of a "blackout" ban on directors of listed companies selling shares in their own firms before earnings announcements under corporate leaders pressure.

After an emergency meeting here Tuesday, the Listing Committee of HKEx said in a statement that HKEx will delay the implementation of the new rules, which has been properly approved by the Securities and Futures Commission after due process, until April 1, 2009.

"The Listing Committee will not be withdrawing the rule (of blackout)," the committee said in the statement. "The Listing Committee strongly believes that the rule (of blackout) is in the long-term interest of Hong Kong and in the interest of the investing public."

Amendments to the Main Board Listing Rules and the Growth Enterprise Market Listing Rules to implement the various proposals are due to take effect on Jan. 1, 2009.

One of these proposals is to extend the so called "blackout" period, during which a director of a listed company is prohibited from trading his shares of his own company, from the current two months to up to seven months a year.

The HKEx and Securities and Futures Commission (SFC) planned to extend the ban in an effort to crack down on insider trading and improve corporate transparency.

The Listing Committee said the decision was made after considering the recent comments from listed issuers, the media and Legislative Councilors on the Financial Affairs Panel together with views from the statutory regulator.

The Listing Committee noted that the scale of the change in the length of the black out period has been perceived as dramatic and that the change has been introduced at too short notice.

About 300 local business leaders, including tycoon Li Ka-shing, Lee Shau-kee and David Li Kwok-po, signed a petition on Monday asking the SFC and the Listing Committee to withdraw the proposal and conduct fresh consultations on the issue.


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