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FRIDAY, JUNE 18, 1976
COMMODITY EXCHANGE
THE GOVERNOR IN COUNCIL IS EMPOWERED TO GRANT A LICENCE TO A COMPANY TO ESTABLISH AND OPERATE A COMMODITY EXCHANGE SUBJECT TO CERTAIN REQUIREMENTS. THE COMPANY SO LICENSED WILL BE REQUIRED TO ESTABLISH A CLEARING HOUSE FOR THE REGISTRATION AND SETTLEMENT OF ALL FUTURES CONTRACTS EXECUTED ON THE EXCHANGE. ADDITIONALLY, THE COMPANY WILL ALSO BE REQUIRED TO ESTABLISH A GUARANTEE CORPORATION TO GUARANTEE THAT FUTURES CONTRACTS WILL BE FULFILLED IN THE EVENT OF A DEFAULT BY ANY PARTY,
THE BUSINESS OF THE COMMODITY EXCHANGE WILL BE RESTRICTED TO THOSE COMMODITIES LISTED IN THE FIRST SCHEDULE AND WHICH, INITIALLY, WILL BE CONFINED TO, COTTON AND SUGAR.
REGISTRATION
ALL COMMODITY DEALERS (BE THEY MEMBERS OF THE HONG KONG COMMODITY EXCHANGE OR NOT), COMMODITY TRADING ADVISERS AND THEIR REPRESENTATIVES WILL HAVE TO BE REGISTERED. NO COMPANY OR FIRM WILL BE PERMITTED TO CARRY ON BUSINESS UNLESS AT LEAST ONE DIRECTOR OR PARTNER IS REGISTERED.
THERE ARE TWO PRE-CONDITIONS TO REGISTRATION. FIRSTLY, AN INDIVIDUAL (OR HIS COMPANY IF HE IS ACCREDITED TO A COMPANY) MUST BE A MEMBER OF AN INTERNATIONAL EXCHANGE LISTED IN THE SECOND SCHEDULE. SECONDLY, A CASH DEPOSIT OF $100,000 WILL BE REQUIRED OF THOSE DEALERS AND COMPANIES WHO ARE NOT MEMBERS OF THE HONG KONG COMMODITY EXCHANGE. THERE ARE PROVISIONS FOR FINES RANGING FROM $10,000 TO $50,000 FOR NON-REGISTRATION. THE COMMISSTONER CAN REJECT AN APPLICATION FOR REGISTRATION ON VARIOUS GROUNDS. THE PUBLIC WILL BE PERMITTED TO INSPECT THE REGISTER WHICH THE COMMISSIONER IS OBLIGED TO MAINTAIN AND WHICH WILL INCLUDE THE NAMES OF DEALERS, COMMODITY TRADING ADVISERS AND THEIR REPRESENTATIVES, TOGETHER WITH INFORMATION THEY HAVE SUPPLIED IN THEIR APPLICATION FORMS. AN ANNUAL AUDIT OF ALL DEALERS IS COMPULSORY.
TRADING PRACTICES
POWER IS GIVEN TO THE COMMISSION TO ESTABLISH AND FIX LIMITS ON THE AMOUNT OF TRADING OR POSITIONS WHICH MAY BE HELD ON THE EXCHANGE BY A DEALER. IT WILL BE AN OFFENCE (A FINE OF $10,000 AND IMPRISONMENT FOR 6 MONTHS) TO EXCEED THESE LIMITS, DEALING IN COMMODITY OPTIONS WILL BE PROHIBITED ON THE EXCHANGE.
IT WILL BE AN OFFENCE TO CREATE A FALSE MARKET AS REGARDS PRICES OR VOLUME OF TRADING. A PERSON MAY NOT MAKE A STATEMENT WHICH HE KNOWS TO BE FALSE OR MISLEADING. CONTRAVENTION OF THESE PROVISIONS IS LIABLE TO A HEAVY PENALTY (A FINE OF $100,000 AND
IMPRISONMENT FOR 5 YEARS).
/COMPENSATION