XN000022-1987-10-25 — Page 2

SUNDAY, OCTOBER 25, 1987

STOCK AND FUTURES MARKETS TO REOPEN ON MONDAY

BOTH THE STOCK EXCHANGE AND THE FUTURES EXCHANGE WILL BE RE-OPENED AT 11 AM TOMORROW (MONDAY), THE FINANCIAL SECRETARY, MR PIERS JACOBS, SAID TONIGHT.

ANNOUNCING THIS AT A PRESS CONFERENCE, MR JACOBS SAID THAT AS PART OF THE RE-OPENING OF TRADING IN HANG SENG INDEX FUTURES CONTRACTS, A SUPPORT FACILITY IN THE FORM OF COMMITTED DRAWING FACILITIES OF UP TO $2 BILLION HAS BEEN MADE AVAILABLE TO THE HONG KONG FUTURES GUARANTEE CORPORATION LTD.

"THIS WILL ENABLE THE GUARANTEE CORPORATION TO FINANCE THE SETTLEMENT OF ITS OBLIGATIONS TO MEMBERS OF THE HONG KONG FUTURES EXCHANGE IN RESPECT OF EXISTING AND NEW HANG SENG INDEX CONTRACTS, TO THE EXTENT THAT MEMBERS' OBLIGATION TO THE GUARANTEE CORPORATION IN RESPECT OF INDEX CONTRACTS ARE DELAYED OR NOT MET, HE SAID.

A

ONE FACILITY, OF UP TO $1 BILLION, WILL ВЕ PROVIDED BY NUMBER OF LEADING BROKERS IN THE FUTURES MARKET, AND BY SHAREHOLDERS OF THE GUARANTEE CORPORATION WHICH INCLUDE HONG KONG AND INTERNATIONAL BANKS AS WELL AS THE INTERNATIONAL COMMODITIES CLEARING

HOUSE.

THE SECOND FACILITY, ALSO OF UP ΤΟ $1 BILLION, WILL BE PROVIDED BY THE GOVERNMENT FROM THE EXCHANGE FUND.

"THE GOVERNMENT FACILITY WILL BE PROVIDED ON A LAST-IN FIRST-OUT BASIS, MR JACOBS STRESSED.

"

НЕ ADDED THAT THESE FACILITIES WILL BE REPAID THROUGH A TRANSACTION LEVY ON THE FUTURES EXCHANGE AND A NEW LEVY ON STOCK EXCHANGE DEALINGS, AND FROM DELAYED PAYMENTS BY AND RECOVERIES FROM DEFAULTING MEMBERS OF THE FUTURES EXCHANGE.

"REPAYMENT WILL BE OVER A MAXIMUM PERIOD OF FIVE YEARS, AND INTEREST WILL BE CHARGED AT MARKET RATES," HE SAID.

MR JACOBS POINTED OUT THAT THE GOVERNMENT'S DECISION ΤΟ INTERVENE WAS BASED ON TWO PREMISES.

"THE FIRST IS THAT THE OBLIGATIONS OF THE FUTURES EXCHANGE SHOULD BE MET AND THAT CONTRACTS FREELY ENTERED INTO SHOULD BE CARRIED OUT.

"THE CONSEQUENCES ON HONG KONG'S REPUTATION AS AN INTERNATIONAL FINANCIAL CENTRE NOT MEETING ITS OBLIGATIONS EXTREMELY GRAVE, HE SAID.

WOULD BE

THE STOCK CAUSED BY THERE ARE

THE SECOND PREMISE. MR JACOBS SAID, WAS THAT EXCHANGE SHOULD BE PROTECTED FROM UNDUE SELLING PRESSURES LACK OF CONFIDENCE IN THE FUTURES EXCHANGE, WITH WHICH VERY CLOSE LINKS THROUGH THE HEDGING ON THE FUTURES EXCHANGE OF PHYSICAL HOLDINGS OF SHARES ON THE STOCK EXCHANGE.

/THE FINANCIAL