Whole Section

  • Practice Note 5.12.3 Transaction with no change in beneficial ownership

    • 1. Introduction

      • 1.1

        Rule 5.12.3 states that a Trading Member or a Trading Representative must not effect, take part in, be concerned in, or carry out, directly or indirectly, any transaction to purchase or sell a security or futures contract, being a transaction that does not involve any change in the beneficial ownership of the security or futures contract as defined in Section 197(5) of the Securities and Futures Act.

        Added on 3 June 20193 June 2019.

      • 1.2

        Rule 5.12.3 further states that it is a defence if the Trading Member or Trading Representative can show that the purpose or purposes for which it or he purchased or sold the security or futures contract was not, or did not include, the purposes of creating a false or misleading appearance with respect to the market for, or the price of, the security or futures contract.

        Added on 3 June 20193 June 2019.

    • 2. Guidance on Rule 5.12.3

      • 2.1

        A transaction that does not involve any change in beneficial ownership will not be considered to be for the purpose or purposes of creating a false or misleading appearance with respect to the market for, or the price of, the relevant security or futures contract if the transaction arises under any of the following circumstances:

        (a) orders from a fund manager whose instructions are intended to switch the security or futures contract from one sub-account to another for legitimate commercial reasons; or
        (b) orders from an affiliate overseas, acting on behalf of different beneficial owners, and the trades will be booked out eventually to these beneficial owners.

        Added on 3 June 20193 June 2019.