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WEDNESDAY, JUNE 30, 1993
A COMMON MALPRACTICE IS THAT THE COMPANY WILL CARRY OUT MANY MORE TRANSACTIONS THAN WOULD BE WARRANTED IN ORDER ΤΟ MAXIMISE COMMISSION CHARGES.
OTHER MALPRACTICES INCLUDE PUTTING THE CLIENT AGAINST THE MARKET TREND, THE ISSUE OF DISHONOURED CHEQUES AND TRADING WITHOUT AUTHORITY.
THERE ARE
MISBEHAVIOUR, EVEN
CIVIL LIABILITIES.
ENFORCEMENT PROBLEMS AGAINST SUCH KINDS OF THOUGH THEY COULD INVOLVE CRIMINAL OFFENCES
AND
PROVE
IT IS OFTEN DIFFICULT TO SECURE SUFFICIENT EVIDENCE TO THAT THESE COMPANIES HAVE DISHONESTLY OR RECKLESSLY TRADED THE CLIENT'S ACCOUNT.
MR CARTLAND EXPLAINED THAT THE FRAMEWORK BEING PROPOSED WAS MODELLED ON THAT FOR REGULATING SECURITIES AND COMMODITIES DEALERS. COMPANIES ENGAGED IN THE BUSINESS AND THEIR REPRESENTATIVES WOULD BE SUBJECT TO REGISTRATION BY THE SFC.
THE "FIT AND PROPER" CRITERIA WILL BE USED IN ASSESSING APPLICATIONS FOR LICENCES. RELEVANT CONSIDERATIONS INCLUDE APPLICANT'S FINANCIAL STATUS, EDUCATION OR OTHER QUALIFICATIONS, ABILITY TO ACT HONESTLY AND FAIRLY, HIS REPUTATION, CHARACTER RELIABILITY.
AN
HIS
AND
TO
OF
"THE SFC WILL HAVE POWER TO SUSPEND OR REVOKE A LICENCE, SUPERVISE AND INVESTIGATE LICENCE HOLDERS FOR SUSPECTED BREACHES THE PROPOSED FRAMEWORK AND TO INTERVENE IN THE BUSINESS OF A LICENSED TRADER WHERE NECESSARY.
"THE COMMISSION WILL ALSO BE ABLE TO STIPULATE STRINGENT CONDUCT RULES IN VIEW OF THE NATURE OF THE BUSINESS," MR CARTLAND SAID.
CONDUCT RULES WILL COVER IMPORTANT ISSUES SUCH AS A BINDING WRITTEN CLIENT AGREEMENT, A MECHANISM FOR SETTLING DISPUTES, HOW MARGIN CALLS ARE TO BE MADE, THE ISSUE OF DETAILED CONTRACT NOTES то CLIENTS, THE CONDUCT OF DISCRETIONARY ACCOUNTS AND DEALING PROCEDURES.
LICENSED TRADERS WILL NEED TO MAINTAIN SEGREGATED TRUST ACCOUNT FOR CLIENTS' MONEY. THE SFC WILL BE EMPOWERED TO PROMULGATE RULES REGARDING FINANCIAL RESOURCES TO BE MAINTAINED BY LICENSED TRADERS.
AUDITED FINANCIAL STATEMENTS WILL HAVE TO BE LODGED WITH THE SFC FOR EVERY FINANCIAL YEAR WHILE OTHER RETURNS MAY BE REQUIRED BY THE SFC.
THE COMMISSION MAY ALSO APPOINT AN AUDITOR TO EXAMINE THE BOOKS, ACCOUNTS AND RECORDS OF A LICENCE HOLDER.
HAWKING OF BUSINESS WILL BE PROHIBITED EXCEPT UNDER CERTAIN RESTRICTIVE CIRCUMSTANCES.
A
"TO ENSURE THE FINANCIAL STRENGTH OF THE LICENSED TRADER, THERE WILL BE A MINIMUM SHARE CAPITAL REQUIREMENT, CURRENTLY ENVISAGED AT LEVEL SLIGHTLY HIGHER THAN THAT REQUIRED FOR A DEPOSIT-TAKING COMPANY, MR CARTLAND ADDED.
H
/SINCE COMPANIES