XN000022-1987-10-28 — Page 3

WEDNESDAY, OCTOBER 28, 1987

1

BILL GIVES CLEAR AUTHORITY FOR IMPOSING LEVIES

THE ESSENTIAL ELEMENT IN THE CURRENT RESCUE OF THE HONG KONG FUTURES EXCHANGE WAS TO ENSURE THAT THE HONG KONG FUTURES GUARANTEE CORPORATION REMAINED SOLVENT SO THAT IT COULD CONTINUE TO UNDERWRITE GUARANTEES IN RESPECT OF CONTRACTS IN THE HANG SENG INDEX FUTURES MARKET, THE FINANCIAL SECRETARY, THE HON PIERS JACOBS, SAID IN THE LEGISLATIVE COUNCIL TODAY (WEDNESDAY).

MOVING THE SECOND READING OF THE EXCHANGES (SPECIAL LEVY BILL 1987, MR JACOBS SAID TWO FACILITIES WERE EXTENDED TO THE GUARANTEE CORPORATION ON OCTOBER 26.

THE FIRST FACILITY, TOTALLING $1 BILLION, WAS PROVIDED FULL MEMBERS AND MARKET MEMBERS OF THE FUTURES EXCHANGE, SOME FIRMS AND THE SHAREHOLDERS OF THE GUARANTEE CORPORATION.

BY

THE BROKING

THE SECOND FACILITY, ALSO OF $1 BILLION, WAS PROVIDED ev THE GOVERNMENT THROUGH THE EXCHANGE FUND.

BECAUSE OF THE SITUATION PREVAILING WHEN THE STOCK MARKET REOPENED ON OCTOBER 26, TWO FURTHER, SIMILAR, FACILITIES WERE EXTENDED TO THE GUARANTEE CORPORATION, MR JACOBS SAID.

THE

THESE INCLUDED AN ADDITIONAL $1 BILLION FROM THE GOVERNMENT THROUGH THE EXCHANGE FUND, AND A TOTAL OF $1 BILLION FROM HONGKONG BANK, THE STANDARD CHARTERED BANK, AND THE BANK OF CHINA.

WHILE THE FIRST TWO FACILITIES CARRIED INTEREST AT A EQUAL TO THE PRIME LENDING RATE, THE OTHER TWO CARRIED INTEREST AT ANNUAL RATE OF 7.5 PER CENT.

RATE

AN

MR JACOBS SAID THE INTEREST AND PRINCIPAL OF THE FACILITIES WERE REPAYABLE OUT OF THREE SOURCES.

THESE WERE:

*

IN

A LEVY OF $30 PER TRANSACTION, BUYING OR SELLING, RESPECT OF TRADING DONE IN THE STOCK INDEX MARKET OF THE FUTURES EXCHANGE;

AN ADDITIONAL LEVY OF 0.03 PER CENT PAYABLE ON TRANSACTIONS, BUYING OR SELLING, IN THE STOCK EXCHANGE: AND

THE

NET AMOUNTS RECEIVED IN RECOVERY FROM MEMBERS OF FUTURES EXCHANGE WHO HAVE DEFAULTED IN RESPECT OF THEIR OBLIGATIONS TO THE GUARANTEE CORPORATION.

"THE LEGISLATION REGULATING THE FUTURES EXCHANGE AND THE STOCK EXCHANGE MAKES PROVISION FOR VARIOUS FEES AND CHARGES TO BE IMPOSED, BUT THESE MUST RELATE TO IMPLEMENTATION OF THE LEGISLATION," HE SAID.

"THE EXCHANGES