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Notice on Trading & Settlement Arrangement for Renminbi Denominated Securities
 

(A) Trading of Renminbi Denominated Securities Listed in the HKEX

Stamp Duties, Levies, Fees and Other Expenses in respect of Renminbi Denominated Securities Transaction
According to the announcement of the Hong Kong Exchanges and Clearing Limited (“HKEX”), stamp duties, levies, fees and other expenses in respect of the purchase, sale or other transaction of Renminbi denominated securities will have to be paid in Hong Kong Dollar(“HKD”) (instead of Renminbi) to HKEX and the relevant organizations according to an exchange rate announced in the HKEX website on each trading day. In order to facilitate client to settle the purchase and sale transaction in one single currency of Renminbi, our Company will convert all these fees and charges back to Renminbi at the same exchange rate announced by HKEX


Deposit Renminbi Fund Prior to Trading
If client wishes to purchase Renminbi securities listed in the HKEX, client should first deposit sufficient cleared fund in Renminbi into our company’s Renminbi bank account. After client’s deposited fund has been verified by our Account Department, the client is then allowed to place a buy order relating to Renminbi denominated securities via his/her Internet Trading Account or by calling his/her responsible Account Executive to place the order.


Open a Renminbi Bank Account in Hong Kong
Client needs to open a Renminbi currency bank account with any bank in Hong Kong. Client should consult your bank about the bank account’s opening procedures and the relevant terms and clauses. Some banks may impose restriction on money transfer or remittance of Renminbi from the client’s Renminbi bank account (to a third party Renminbi bank account). Client needs to seek detailed information from your bank regarding the relevant arrangement. Further, client needs to provide your Renminbi bank account details including bank’s name and account number to our Company for fund withdrawal purpose.


Settlement Failure Arrangement
If client does not have sufficient Renminbi fund to meet client’s settlement obligation, client will be held responsible for all losses and expenses arising from the default in settlement including any losses suffered by our Company from the exchange losses in currency conversion. Our Company may at our sole discretion dispose all or any of your Renminbi denominated securities and/or all or any of the client’s assets held with our Company to satisfy the indebtedness or obligations of the client without prior notice to the client.


Attention: If the client has any outstanding amount in HKD , our Company has the right to convert any available funds in Renminbi or other currencies in any of the client’s accounts held with our Company into HKD to settle the outstanding amount in HKD at the exchange rate at our Company’s full discretion.
 

Dividend from Renminbi Stock
Owing to the restrictions and foreign currency exchange control imposed on Renminbi, our Company may pay out the dividends of Renminbi stock in currency other than Renminbi such as HKD.


More Information on Renminbi Securities Trading
Like all other investments, before you decide to trade in any of the Renminbi denominated securities or products, client should thoroughly understand the nature of each Renminbi stock or product, seriously consider your own investment objective, strategy and main characteristics and risks associated with Renminbi securities trading, make assessment on whether the Renminbi securities suits your investment need and whether you can assume the such risks or sustain any losses resulting from such trading. If you are in any doubt, you should seek independent advice from other professional persons.


(B) “Dual Tranche, Dual Counter” Trading Model and Settlement Arrangement

Dual Tranche, Dual Counter (“DTDC”) Model refers to the simultaneous offering and initial listing of two tranches of shares in different trading currencies (i.e. Renminbi and HKD) by the same issuer.


Under the DTDC model, all shares in the Renminbi tranche and the HKD tranche must be of the same class with the same shareholders’ rights and entitlements. Shareholders under the two tranches are expected to be treated equally. Upon listing, shares of the two tranches will be traded on the Stock Exchange of Hong Kong Limited (“Exchange”) under two separate counters and in two different currencies (i.e. one counter in RENMINBI and the other in HKD). Trades of the two counters will be cleared and settled separately under CCASS. A shareholder may transfer his/her shares from one counter to the other through the share registrar of the issuer or CCASS.


The Renminbi -traded shares and HKD-traded shares of the same listed company will be traded under two separate counters with different stock codes on the Exchange’s trading system. The HKD counter will be a 5-digit number starting with “0” whereas the stock code of the Renminbi counter will be a 5-digit number starting with “8” and the last four digits of the two stock codes will be identical. For more information about DTDC model, please visit the HKEX website: www.hkex.com.hk


(1) Stock Conversion Request Form
Client needs to fill in the Stock Conversion Request Form and then submit to our Company no later than 12:00 noon for same day transfer. Please note that no transfer will be effected unless the shares of both stock codes are Multi-counter Eligible Securities of the same issuer. A handling charge of HKD30.00 will be imposed on each multi counter transfer instruction.


(2) Inter Counter Trading under DTDC Model
On the basis that the shares of the Renminbi and HKD counters of the same issuer are of the same class and are transferable from one counter to another, it is understandable that the buying or holding of HKD-traded shares, followed by the selling of RENMINBI-traded shares and vice versa, would be regarded as a long sale.


Our trading system has been designed to facilitate our clients to conduct Inter counter trading under DTDC model.
E.g. If a client holds 5000 units of ETF with stock code #03118 (HKD counter of HGI MSCI CN A) and wants to sell all shares as #83118 (Renminbi counter of HGI MSCI CN A -R)*. The client enters a sale order through his/her Internet Trading Account or by calling his/her Account Executive for 5000 units of #83118, our System will search both stocks #03118 and #83118 in the client’s holding. If there exists sufficient quantity after summing of quantity of each stock code, a message box will pop up to ask the client whether to transfer 5000 units of #03118 into #83118 or not. Client needs to confirm the transfer in the trading system. Then the sale order will be sent directly to the Exchange for execution.


Attention:
Multi counter transfer through the Trading System is valid only for filled inter counter sale order (fully filled or partially filled) Transfer fee of $30.00 will be deducted from the client’s account on the filled or partially filled sale order. Any unsuccessful sale order of unfilled quantity will resume its original stock code. Transfer fee will not be collected for an entirely unsuccessful sale order.


(C) Renminbi Funds Deposit and Withdrawal

Renminbi Funds Deposit

  1. By Transfer

    Client should ensure the fund is transferred from the client’s own bank account with the same name as the securities account holder. Our company do not accept fund deposit from third party, unless approved by senior management.

    Client can deposit Renminbi funds into the following bank accounts of our company:
    ​​​​​
    A/C Name: Mouette Securities Company Limited
    BANK OF CHINA 012-891-060-12995 (Renminbi)
     
  2. Cheque Deposit

    The cheque must be payable to “Mouette Securities Company Limited” and funds will only be available after two working days.

    Client should fax the deposit slip with client’s full name and account number with us to our settlement department at fax no. (852) 2666 4677 and call (852)2666 4626 for verification.

    Client can login our Internet Trading System or Mouette securities mobile app and submit the deposit request with the attachment of the copy of deposit slip through the account service electronically.
Renminbi Funds Withdrawal
  1. Client can submit Fund Withdrawal Request Form which is available for download from our Company’s website. Complete and sign on the form then fax it back to our settlement department at (852) 2666 4677.
  2. Client can login our Internet Trading System or Mouette securities mobile app and submit the withdraw request through the account service electronically.
  3. Client can also submit the cash withdrawal form in our office in person or through your Account Executive.

For valid cash withdrawal instructions received before 12:00 noon on each working day, our company will endeavor to deposit the withdrawal amount in the form of crossed cheque into the designated bank account of the client provided in the account opening agreement within the same day. All cheques will be made payable only in the same name of the securities account holder.


(D) IPO Subscription of Renminbi Denominated Securities

Open a Renminbi Bank Account in Hong Kong
Client needs to open a Renminbi currency bank account with any bank in Hong Kong for settlement purpose.


Deposit Renminbi Fund Prior to IPO Subscription
Client must make full payment in Renminbi in each Renminbi IPO application. Therefore, client should first deposit sufficient cleared fund in Renminbi into our Company’s Renminbi bank account upon application. Then notify our company of the deposit and fax the deposit slip at fax number (852)2666 4677 to our Settlement Department for verification. Client can also login our Internet Trading System or Mouette securities mobile app and submit the deposit notification to our company, attaching the copy of deposit slip through the “account service” function electronically.

 

IPO Handling Fee will be charged by our Company in Renminbi from client’s securities account upon application.


IPO Refund
If the IPO application is not successful or only allotted in part, the refund of the application monies in Renminbi will be credited to client’s securities account. Client can submit his/her Renminbi funds withdrawal request and our Company will issue crossed cheque and deposit it into client’s designated Renminbi bank account.


(E) Risk of Trading in Renminbi Denominated Securities

(1) Investment Risk
Like any securities investment, the prices of Renminbi (“RMB”) securities may fluctuate, sometimes dramatically. The price of a RMB security may move up or down, and may become valueless. It is as likely that losses will be incurred rather than profit made as a result of buying and selling RMB securities. Investors may also suffer a loss even if RMB appreciates against Hong Kong dollars or other currencies.


(2) Currency Risk
Investing in RMB securities involves currency risk. RMB is not yet freely convertible in Hong Kong, and is subject to foreign exchange controls and restrictions. Particularly, conversion of RMB through banks in Hong Kong is subject to certain restrictions. It may be difficult for investors to convert RMB into Hong Kong dollars or other currencies or vice versa at any specific time, and conversion will be subject to conversion costs.


In addition, the value of RMB against Hong Kong dollars or other foreign currencies may be affected by a wide range of factors. There is no guarantee that RMB will not depreciate. A depreciation of RMB may result in a decrease in the market value of the RMB securities and the realization price of the RMB securities. For non-RMB based investors who are trading in RMB securities, they may also sustain loss in the event that they subsequently convert any RMB proceeds back to Hong Kong dollars or other base currencies.


There are also significant restrictions on the remittance of RMB into and out of the PRC. If the issuer of the RMB securities is not able to remit RMB to Hong Kong or make distributions in RMB due to exchange controls or other restrictions, the issuer may make distributions (including dividends and other payments) in other currencies. Investors may therefore be exposed to additional foreign exchange risk.


(3) Liquidity Risk
The liquidity and trading price of RMB securities may be adversely affected by the limited availability of RMB outside the PRC and the restrictions on the conversion of RMB. These factors may affect the amount of liquidity in RMB for investors and accordingly adversely affect the market demand for RMB securities.


In addition, RMB securities are a new type of investment product in Hong Kong and there is no assurance that there will be a liquid secondary market in RMB securities. Investors may therefore not be able to dispose of the RMB securities at such prices, in such amounts and/or at such times at which they would wish to, or which they may otherwise be able to in respect of Hong Kong dollar denominated securities listed on The Stock Exchange of Hong Kong Limited. As a result of such liquidity risk, the trading price may not fully reflect the intrinsic value of the RMB securities.


(4) Exchange Rate Risks
The value of RMB against the Hong Kong dollars and other foreign currencies fluctuates and is affected by changes in the PRC and international political and economic conditions and by many other factors. For RMB products that MSCL offer, the value of your investment in Hong Kong dollars terms may decline if the value of RMB depreciates against the Hong Kong dollars.


(5) Other Risks
The above represents only some of the risks generally associated with trading in RMB securities. RMB securities are also exposed to risk that are inherent in all investments such as default risk, counterparty risk, credit risk, market risk, interest rate risk etc. (where applicable). An investor should read the relevant prospectus or offering document for detailed information about the proposed offer and risk associated with the relevant RMB security and consider if the investment is suitable in light of his/her financial position, risk profile and other circumstances before deciding whether to invest in the relevant RMB security. Where in doubt, investors should consult their legal, financial or other professional adviser before making any investment decision.  
 
* The above information is for reference only and subject to change without prior notice.