XN000022-1994-08-22 — Page 9

MONDAY, AUGUST 22, 1994

THE

TO BE SO

COMMISSION WILL ENSURE THAT APPLICANTS ARE FIT AND PROPER REGISTERED AND THAT THEY FULFIL THE REQUISITE FINANCIAL REQUIREMENTS SUCH AS A MINIMUM PAID-UP CAPITAL OF $30 MILLION FOR A

TRADER LICENCE.

"THE INTENTION IS TO ENSURE THAT ONLY THOSE WITH SOUND FINANCIAL BACKGROUND AND PROVEN INTEGRITY ARE ALLOWED TO CONDUCT A BUSINESS IN THIS FIELD," HE SAID.

NUMBER OF

THE SECURITIES AND FUTURES COMMISSION ALSO MADE A RULES IN JULY TO STIPULATE THE DETAILED REQUIREMENTS WITH WHICH LICENCE HOLDERS SHOULD COMPLY.

то

THEY COVER A RANGE OF SUBJECTS SUCH AS FINANCIAL RESOURCES BE MAINTAINED BY TRADERS, PRACTICES TO BE ADOPTED BY TRADERS IN CONDUCTING THEIR BUSINESSES, INCLUDING THE REQUIREMENTS FOR INTERNAL CONTROLS, MINIMUM MARGIN AND CLIENT AGREEMENT.

SUCH REQUIREMENTS ARE PRIMARILY INTENDED TO PROTECT THE OVERALL INTEGRITY OF THE MARKET. THE FUNDAMENTAL PRINCIPLE IS THAT BOTH THE TRADERS AND THEIR CLIENTS SHOULD HAVE THE ABILITY TO FACE THE RISKS ARISING FROM LEVERAGED FOREIGN EXCHANGE TRADING.

"THE SECURITIES AND FUTURES COMMISSION IS HOLDING A SERIES OF SEMINARS TO BRIEF EXISTING TRADERS ON THE DETAILS OF THE LICENSING AND REGULATORY FRAMEWORK, MR CARTLAND SAID.

LL

AFTER THE IMPLEMENTATION OF THE ORDINANCE ON SEPTEMBER 1, EXISTING BUSINESSES WILL HAVE 30 DAYS TO APPLY FOR A LICENCE.

THOSE WHICH APPLY FOR A LICENCE WITHIN THE GRACE PERIOD WILL BE ALLOWED TO REMAIN IN BUSINESS UNTIL THE OUTCOME OF THEIR APPLICATIONS

IS KNOWN.

TRADERS WHO CHOOSE NOT TO DO SO WILL HAVE TO CEASE BUSINESS AFTER THE 30-DAY PERIOD.

"I SHOULD REITERATE THAT INVESTORS SHOULD CONTINUE TO EXERCISE EXTREME CAUTION IF THEY CHOOSE TO TAKE PART IN LEVERAGED FOREIGN EXCHANGE TRADING AT THIS STAGE. THEY ARE NOT YET SUBJECT TO ANY FORM OF STATUTORY PROTECTION AT THE MOMENT, MR CARTLAND SAID.

++

"IT IS DIFFICULT FOR INVESTORS TO ANTICIPATE WHETHER THE TRADERS WITH WHICH THEY DEAL AT PRESENT WILL APPLY FOR A LICENCE UNDER THE ORDINANCE OR, IF THEY DO SO, WHETHER THEIR APPLICATIONS WILL BE APPROVED BY THE COMMISSION.

"INVESTORS SHOULD ALSO BEAR IN MIND THAT PROVIDING A REGULATED ENVIRONMENT FOR SUCH ACTIVITIES WILL NOT CHANGE THE FACT THAT THE FOREX MARKET IS VOLATILE.

"FURTHERMORE, THE LEVERAGED NATURE OF THE CONTRACTS CAN IN LOSSES WELL IN EXCESS OF THEIR MARGIN DEPOSITS. INVESTORS THEREFORE MAKE SURE THAT THEIR FINANCIAL POSITIONS ARE STRONG TO SUSTAIN THE RISK INVOLVED," MR CARTLAND SAID.

RESULT

SHOULD ENOUGH

/SECTION 71