Chen Zhihua: I suggest gradually reducing or canceling the stock stamp duty. The GEM board can learn from the Nasdaq tiered system to stimulate vitality.

The new "Policy Address" of Hong Kong will be released on September 17. The President of the Hong Kong Securities and Futures Professional Association, Chen Zhihua, suggested that the authorities can gradually reduce or abolish the stock stamp duty in three stages. It is expected that reducing trading costs can enhance market depth. He also mentioned that the Growth Enterprise Market (GEM) lacks vitality overall due to various regulations and approvals, and has failed to fully support financing for small and medium-sized enterprises. It can learn from the tiered system of the US Nasdaq market, and establish differentiated listing standards for companies of different sizes and development stages. Chen Zhihua said that under the current market structure and related listing regulations, most small and medium-sized enterprises in the high-growth stage cannot be listed on the Hong Kong Stock Exchange. Although there is no profit requirement in the "GEM Listing Rules," the requirements for operating cash flow, market value, research and development expenses, and the lengthy IPO approval process have made GEM lack vitality overall, with low attractiveness to investors and issuers, leaving out small and medium-sized enterprises with growth potential. Regarding the GEM board, he suggested that the Hong Kong Stock Exchange can learn from the tiered system of the US Nasdaq market, establishing differentiated listing standards for companies of different sizes and development stages. For technology innovation companies, relax cash flow or revenue requirements, in addition to existing financial eligibility tests, add more evaluation indicators such as user growth and market share. For emerging industries and companies with great potential but unclear short-term profitability, provide more listing opportunities. For the stock stamp duty, he suggested that the phased reduction or abolition of the stamp duty policy should be considered. In three stages, in the first stage, pilot reduction should be carried out, with the stamp duty reduced from 0.1% within 6 to 12 months; in the second stage, further reduction should be made, within 12 to 24 months, the stamp duty should be further reduced from the first stage, and promote the "stamp duty offset" mechanism, expecting an increase in trading volume compared to the first stage and an increase in institutional long-term M&A willingness; in the third stage, complete abolition, within 24 To 36 months, the stamp duty should be completely abolished, and simultaneously revise the trading levy to maintain regulatory and exchange operating funds, expecting trading costs to be among the lowest globally and enhance market depth. He also mentioned that under the current mechanism, the public disclosure of regulatory warnings often accompanies dramatic fluctuations in stock prices, and the "sudden" problem of warnings: the current practice is like "initiating an explosion," lacking a warning period. Regulatory agencies have key information, while the market (including small shareholders) is completely in the dark before the warning is issued. This information gap objectively puts small shareholders and large shareholders in a passive position, and even suffer greater impacts due to lack of buffer. He suggested that regulatory authorities review the current procedures and point out that this can give the responsible parties the opportunity to correct: fairness is the main prerequisite for major shareholders/companies to have time to take substantive actions to improve equity structure. At the same time, regulatory agencies should strictly monitor the trading behavior of major shareholders and listed companies to prevent insider trading or inappropriate share reductions, ensuring that the interests of small investors are not harmed. Regarding stock options, he pointed out that because most of the trading in the stock options market is related to arbitrage and hedging activities, its development can increase additional liquidity to the overall market, strengthen price discovery mechanisms, improve market efficiency and depth, thereby benefiting other market products. This will help increase overall trading volume, consolidate Hong Kong's position as an international financial center. He said that the association recommends establishing a precise and efficient rapid inclusion mechanism for suitable conditions for stocks, quickly launching weekly and monthly stock options, improving the breadth and depth of stock option products, optimizing market structure, enhancing international competitiveness, and avoiding allowing the US market to dominate in this area. In addition, regarding the Policy Address, the Executive Director and CEO of Bright Smart Securities, Xu Yibin, suggested that the government should subsidize small securities firms to help them improve related support, promote their growth together with the Hong Kong financial market, achieve a situation of "diversity of flowers," rather than just concentrating on supporting a few large securities firms. However, he believes that although the current stock stamp duty in Hong Kong is expensive, it is currently being "resisted by stamp duty." He believes that reducing stamp duty is "secondary."