XN000022-1996-11-06 — Page 50

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Transaction clearance of the HK Futures Exchange

Following is a question by the Hon Chim Pui-chung and a written reply by the Secretary for Financial Services, Mr Rafael Hui, in the Legislative Council today (Wednesday):

Question:

During the "stock market crash" in October 1987, a company named International Commodities Clearing House (HK) Limited was responsible for the transaction clearance of the Hong Kong Futures Exchange at the time. In this connection, will the Government inform this Council whether it knows if the company has completed the transaction clearance work and whether the authorities concerned will make known to the public the problems encountered by the company in handling such work as well as the work during the past nine years?

Reply:

At the time of the "stock market crash" in October 1987, the clearing and guarantee functions of the Hong Kong futures market were handled by two separate bodies, namely International Commodities Clearing House (Hong Kong) Limited (ICCH(HK)) and the Hong Kong Futures Guarantee Corporation Limited (HKFGC) respectively. ICCH(HK) operated the clearing house of the Hong Kong Futures Exchange under contract and at the same time managed the HKFGC under another

contract.

Following the events of October 1987, Lifeboat loans were provided to the HKFGC to enable it to finance the settlement of contracts in Hang Seng Index futures that were delayed or not met. To provide for the repayment of principal and payment of interest on these Lifeboat loans, the Special Levy Fund was established in October 1987 under the Exchanges (Special Levy) Ordinance (Cap. 351). The collection of the Special Levy was suspended in August 1993 and the Lifeboat loans were fully repaid, with interest, in June 1995, ICCH(HK) ceased to manage HKFGC in May 1994. We have been informed that neither ICCH(HK) nor HKFGC encountered any problems in handling the related work.

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