Richard Williams, head of Listing of HKEx (left), listens as Paul Kennedy, acting chief executive oficer of the Securities & Futures Commission, addresses a question at LegCo panel meeting yesterday on the extension of the 'blackout' rule. Edmond Tang

The Hong Kong Exchanges and Clearing Ltd (HKEx) yesterday announced after a special meeting that it would postpone the proposed plan on extending the blackout period for four months.

Richard Williams, head of the Listing Division of the HKEx, said the committee decided to defer the plan after considering the long-term benefits of the territory and the investors.

Wong Ming-wai, a member of the Chamber of Hong Kong Listed Companies, said the four-month extension will not solve the problem, as the essentials of the proposal remain unchanged.

"It is very disappointing. The Hong Kong Exchanges and Clearing does not listen to our opinions, and it does not respond to our concerns," Wong said.

The Legislative Council has also passed a non-binding motion yesterday calling for reopening a fresh six-month consultation period on the proposal, which bans directors of listed companies from buying the shares of their own firms to as much as seven months from the date they announce their results.

Some legislators said the proposed plan will prevent the directors from buying back their companies' shares amid the volatile market, while others questioned the motive of the listed companies for not opposing the blackout rule during the consultation period.

Williams said the extension of the blackout period will not hold back the fund-raising ability and the buyback plans of the listed companies.

"Directors should be the long-term investors, but not the active trading investors of the company's security," Williams said in the special meeting of the Legislative Council financial affairs panel yesterday.

As a large proportion of listed companies in Hong Kong is family-owned and managed, the proposal will provide a level playing field for all the investing parties, he added.

Williams also stressed that the consultation period was sufficient, while the listing committee has ensured no responses would be ignored.

During the consultation period, the committee received a total of 105 submissions from respondents including listed issuers, market practitioners, and professional and industry associations.

Paul Kennedy, Acting Chief Executive Officer of Securities and Futures Commission (SFC), said the blackout period will not reduce the overall liquidity in the market, as directors' trading is not significant to the overall market turnover.

He said the commission has analyzed the transactions of the directors and their associates over the past twelve months, while of the 42 listed companies, the directors' trading contributed only less than 0.125 percent of all transactions of the benchmark Hang Seng Index.

Secretary for Financial Services and the Treasury K C Chan said the public should be consulted before making any amendments to the regulations to maintain a balanced structure.

(HK Edition 12/31/2008 page2)