XN000022-1985-07-12 — Page 13

FRIDAY, JULY 12, 1985

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STOCK EXCHANGE MEMBERSHIP CRITERIA CHANGE PROPOSED

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THE GOVERNMENT TODAY (FRIDAY) PUBLISHED TWO BILLS WHICH, IF PASSED BY THE LEGISLATIVE COUNCIL, WILL RESULT IN CHANGES IN THE MEMBERSHIP STRUCTURE AND CRITERIA OF THE STOCK EXCHANGE OF HONG KONG LIMITED (+THE UNIFIED EXCHANGE+), AND IN THE REGISTRATION OF DEALERS IN SECURITIES.

UNDER A STOCK EXCHANGES UNIFICATION (AMENDMENT) BILL 1985, CORPORATIONS WILL BE ALLOWED TO BE CORPORATE MEMBERS OF THE UNIFIED EXCHANGE. HOWEVER THEY WILL HAVE TO BE INCORPORATED IN HONG KONG, OF GOOD FINANCIAL STANDING AND INTEGRITY AND REGISTERED AS A DEALER UNDER THE SECURITIES ORDINANCE.

IN ADDITION, THEY WILL HAVE TO CARRY ON THE BUSINESS OF DEALING IN SECURITIES AND THOSE ACTIVITIES WHICH ARE NORMALLY ANCILLIARY TO A STOCKBROKING BUSINESS.

A GOVERNMENT SPOKESMAN EXPLAINED THAT AT PRESENT ONLY INDIVIDUALS ARE ELIGIBLE FOR MEMBERSHIP OF THE EXCHANGE.

ANOTHER MAJOR CHANGE, PROPOSED TO THE MEMBERSHIP CRITERIA, IS TO REMOVE THE EXISTING DISQUALIFICATION FROM MEMBERSHIP OF DIRECTORS OR EMPLOYEES OF LICENSED BANKS AND DEPOSIT-TAKING COMPANIES, SOLICITORS AND PROFESSIONAL ACCOUNTANTS.

IN ADDITION, THE EXISTING REQUIREMENT ON THE EXCHANGE COMPANY TO PROHIBIT A MEMBER FROM ENTERING INTO PARTNERSHIP WITH ANY PERSON WHO IS NOT A MEMBER WILL BE DELETED.

+ INSTEAD, THE BILL SPECIFIES THAT THE EXCHANGE COMPANY SHALL ALTER ITS CONSTITUTION TO REQUIRE ANY MEMBER WHO INTENDS TO TRADE IN PARTNERSHIP TO NOTIFY THE EXCHANGE WHEN THE MEMBER'S APPLICATION FOR REGISTRATION AS A DEALING PARTNERSHIP IS MADE TO THE COMMISSIONER FOR SECURITIES,+ THE SPOKESMAN EXPLAINED.

THE BILL ALSO RENDERS VOID ANY DEED OF TRUST ARRANGEMENTS CREATING THIRD PARTY CONTROL. HOWEVER THIS DOES NOT AFFECT NORMAL INSTRUCTIONS GIVEN BY CLIENTS OF A STOCKBROKER, AND TRANSACTIONS UNDERTAKEN IN THE ORDINARY COURSE OF STOCKBROKING BUSINESS PARTNERSHIP ARRANGEMENTS, OR AGREEMENTS UNDER WHICH THE MEMBER ACTS AS AN AGENT FOR FOREIGN BROKERS.

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ANOTHER IMPORTANT AMENDMENT RELATES TO THE FINANCIAL REQUIREMENTS ON MEMBERS. THE SPOKESMAN POINTED OUT THAT FROM THE DAY THE UNIFIED EXCHANGE BEGINS OPERATION, INDIVIDUAL AND CORPORATE MEMBERS WILL BE REQUIRED TO PROVIDE AND AT ALL TIMES MAINTAIN IN THE BUSINESS A NET CAPITAL OF NOT LESS THAN HK$1 MILLION AND HK$5 MILLION RESPECTIVELY.

/+FOR DEALING