XN000022-1996-11-27 — Page 42

- 30 -

-

Central Clearing and Settlement System

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:

Reply:

Does the Government know -

(a)

(b)

(a)

why individual investors are not allowed to open stock storage accounts with the central clearing house under the direct control of the investors concerned; and whether the authority concerned has given consideration to allowing individual investors to open such accounts in the near future;

whether the authority concerned has assessed if the above situation has resulted in individual investors choosing stock brokers with a banking background for transaction of stocks, thus affecting the business of stock brokers without such a background?

The Central Clearing and Settlement System (CCASS) was designed as a "wholesale" clearing house and cannot cater for direct investor participation without significant system modification and development. However, under the Segregated Account with Statement Service, CCASS participants can nominate investors and other persons to receive statements directly from Hongkong Clearing with respect to stock movements relating to their securities held in CCASS through the relevant CCASS participants.

The inclusion of investors as direct participants in the CCASS has been a key development issue in the strategic plan of Hongkong Clearing. Following a review of the issues involved, the Hongkong Clearing has recently drawn up a working model for direct investor participation in CCASS and will soon conduct a public consultation exercise. Hongkong Clearing estimates that an 18-month lead time will be required, including a 4-month market consultation on the working model, for the necessary system development, equipment installation and amendments to CCASS Rules and operational procedures before the present system can cater for individual investor accounts.

+