]
]
Comment or recommendation
3. Paragraph 6.58 "In particular, we
recommend that the introduction of a new Contract should depend on (a) the Exchange being satisfied that all the Clearing Members for the new Contract are robust and that the new market will be adequately tiered (b) a Members' fund being established to support the risks of clearing and the new Contract (c) the Exchange taking de facto control of the risk management aspects of the clearing function for the new Contract with the Clearing House answerable to the Exchange's senior management on a day- to-day basis and (d) the regulatory authority being satisfied that adequate safeguards for the new Contract concerned are in place."
4.
Paragraph 6.62 "We therefore recommend
that the Exchange's Articles of Association should be amended to remove all dividend provisions and to state in
Action taken by the HKFE
particular reference to spread
margins, the trading months, position limits and the introduction of options (to balance long and short positions across the market).
As to
As to (a), the Exchange will continue its rigorous programme of surveillance of all Members. Moreover, the capital requirements for the Exchange and the Clearing House will now be merged. The tiering of the market will depend upon the cooperation from Members to become Non-Clearing Members. There are indications that this cooperation will be forthcoming. As to (b), the provisions relating to the Clearing House provide for such a fund. (c), as the new Clearing House is to be a wholly-owned subsidiary of the Exchange the Exchange having the power to appoint the directors of the Clearing House by notice in writing, the Exchange will have de facto control. Moreover, it is intended that the terms of the appointment between the Exchange and the Clearing House will provide for frequent exchange of views. Both the Rules of the Exchange and of the Clearing House contain
provisions which clearly permit a free and frequent exchange of information between the two bodies. As to (d), this is a matter outside the control of the Exchange, but the Exchange is confident that the regulatory authorities will find the package of new proposals satisfactory.
Both the Memorandum and the Articles of Association of the Exchange have been amended to provide that no dividends may
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