XN000022-1974-02-13 — Page 19

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Wednesday, February 13, 1974

SECURITIES BILL PASSES WITH AMENDMENTS

Hong Kong's stock exchanges will now be required to contribute

to only one common compensation fund instead of setting up their own

individual funds for the protection of investors.

This is provided in the amended Securities Bill which passed its third

and final reading in the Legislative Council today.

The amendment to the part dealing with the compensation fund scheme

was one of many moved by the Financial Secretary, Mr. Philip Haddon-Cave.

"In principle," Mr. Haddon-Cave said, "the compensation scheme

is simply a form of insurance to protect the investor up to a stated level

in case a member of a stock exchange defaults, and the fund from which

compensation is to be paid is to be made up of a contribution from nach

of the exchanges on the basis of a uniform sum for each individual member."

Although the scheme as originally proposed in the bill was

substantially changed, the Financial Secretary emphasised "the basic

principles have boon maintained."

Under the bill, each exchange is obliged to deposit with the

compensation fund in respect of each of its members a sum equal to

$25,000 in cash and an irrevocable bank guarantee for a further $25,000.

However, in respect of this latter requirement, the Commission for

Securities may exempt an exchange from compliance if it is satisfied that

the exchange is operating a satisfactory guarantee system protecting its

own members,

/Mr. Haddon-Cave

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