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Summary of the recommendations and comments
of the
Securities Review Committee
and indication of action taken
by the HKFE
annex 3
Comment or recommendation
1. Paragraph 6.52 "We have therefore
concluded that the ESI Contract should not be dropped on regulatory grounds provided that sufficient safeguards and risk management controls are in place to prevent a recurrence of October, 1987."
2.
Paragraph 6.53 "In the light of the comments above, we further recommend that the Exchange should review the Hang Seng Index Futures Contract.
on taken by the HKFE
A number of steps are being taken to introduce greater safeguards and risk management controls. New categories of Membership are being introduced in the Exchange, the purpose of which is to enable the Exchange to be able to identify more quickly and easily the exact nature of every Member's business. Capital requirements vill in future be linked to the new categories and thereby be related to the capacity of
Members, rather than being
the
dictated by the markets in which Members deal. In addition, new Clearing House vill
establish a fund designed to provide the necessary resources to support the Clearing House in meeting its obligations es counterparty in the event of 2 default by any party. The Exchange intend to make fuller use in future of the powers of the Chief Executive to impose position limits on individual Members and accordingly the Rules in this respect have been strengthened. There will be much closer liaison between the Exchange and the Clearing House in future. The Exchange expects in future to refocus its and the Clearing House's margin policy to have greater reference to merket volatility both at Clearing House and broker level.
A review of the Contras is undervay by the Indices Committee. The revier has already considered margins and market vola:
No comments yet.
Private notes are available after approval.