Consultative paper proposes new standards for registrars
A CONSULTATIVE paper on share registration proposing a new set of performance standards for share registrars has been released by the stock exchange.
The document also outlines an immediate reduction of the 21-day registration period to 14 days, with a further reduction to 10 days.
There would be an increase in scrip fees to help the registrars cover the extra costs involved.
Noting that Hongkong's registration period is long compared with overseas markets, the exchange says a reduction would be ''in keeping with the new realities of the market and efficiencies that CCASS [the Central Clearing and Settlement System] has brought.'' In conjunction with reducing the registration period, the exchange is proposing increasing the maximum scrip fee limit, governed by the exchange listing rules, to $3 from $2.
This fee is charged for each transfer and each time a new share certificate is issued.
The Federation of Share Registrars, which has been asking for a review of the scrip fee since 1989, has told the exchange it is willing to accept the reduction in registration period at the same time as the fee increase.
''The exchange also understands that the federation is willing to consider a further reduction in the registration period to 10 days (seven business days) approximately 18 months after the proposed increase in scrip fee,'' the exchange says.
This further reduction would be done on the basis of another review of registrars' costs and level of business, which could lead to a further increase in the scrip fee.
The exchange says: ''If any increase in the scrip fee is to be implemented it should be balanced with an improvement in services provided to investors by share registrars.'' The consultative paper also proposes a tightening of the regulation governing share registrars.
Currently, the Securities and Futures Commission (SFC) lacks the power to de-authorise an individual registrar as long as it remains a member of an approved association.
The only rules governing registrars' performance are the listing rules on scrip fees and registration periods.
The exchange says it is proposing that it take a more active role in regulating registrars as far as they are covered by the listing rules.
''Under such a regime the exchange will be responsible for regulating all share registrars' activities covered by the listing rules, indirectly through listed companies.
''To this end, the exchange proposes to introduce a set of performance standards, or a Best Practice Guide, to be observed by all share registrars which will be drawn up.''