For Notes/Bonds Purchased Through Placing Banks

Secondary market dealing of notes or bonds purchased through Placing Banks are traded over-the-counter (OTC), pursuant to market making arrangements. Placing Banks quote two-way prices during normal banking hours, depending on prevailing market. Each institution uses specific internal guidelines restricting exposure to any single entity.

Market markers are appointed by issuers for each issue. Each market maker has agrees to quote price at which it will buy or sell the notes or bonds. This arrangement, however, does not assure an active secondary market trading. Quoted bid and offer prices quoted may differ among market makers and from the last traded in the Hong Kong Stock Exchanges and Clearing Limited (HKEx).

Settlement cycle for OTC trades could be as short as T+0.

For Notes/Bonds Purchase Through the HKSCC

For notes/bonds purchased through the Hong Kong Settlements and Clearing Corporation (HKSCC), secondary market trading is done through the HKEx. Settlement is required through the Central Clearing and Settlement System (CCASS) on the second trading day (T+1). A transaction levy of 0.005%, an investor compensation levy of 0.002% and a trading fee of 0.005% of the amount traded is charged to both buyer and seller.

HKEX trading is Monday to Friday (excluding public holidays) from 10:00am to 4:00am.

Settlement for exchange traded transactions is T+2.

Trading Schedules

Hong Kong Stock Exchanges

Trading at the Hong Kong Stock Exchange is conducted from Monday to Friday (excluding public holidays) at the following time: morning session, from 10am to 12.3pm; extended morning session, from 12.30 to 2.30pm; and afternoon session, from 2.30pm to 4pm.

Transferring of Securities

Investors trading over the HKEx are required to instruct their Placing Bank to transfer the notes/bonds to the Investor Account with the HKSCC or the securities or custodian account with the designated CCASS Broker/ Custodian Participant. Conversely, investors who trade the notes/bonds OTC thorough a Placing Bank instruct HKSCC or the designated CCASS Broker/Custodian Participant to transfer the notes/bonds to the Placing Bank.

Fees may be charged and/or restrictions may be applied by the Placing Bank, HKSCC or the designated CCASS Broker/Custodian Participant. The investor should consult with relevant financial channels before deciding to transfer the notes/bonds.

The “CMU Price Bulletin” provides the latest indicative bond prices quoted by major banks in Hong Kong.

Investors collect interest or redemption payments through Placing Banks. HKSCC or CCASS Broker/Custodian Participants. On interest payment dates and redemption dates, the HKMA arranges for the designated settlement account of the Recognized Dealer or CCASS to be credited with the relevant payment.

All payments of principal and interest on notes/bonds are credited through the investment account where the notes/bonds are held.

Taxation

Interest income derived from Hong Kong dollar debt instruments are liable for profit tax. A detailed discussion on taxation of trading profits and interest may be found at the HK:Rules and Regulation>Market Regulation>Taxation page.