Comment or recommendation
22. Paragraph 7.48 "We therefore recommend
that to ensure that the risk creators take collective responsibility for the integrity of their market, part of the Clearing, House's risk should be backed by a fund made up of deposits from Clearing Members."
Action taken by the HKFE
In practice, the fund will comprise the deposits to be made by Broker Lenders under the arrangements reached in connection with the lifeboat to the Guarantee Corporation and monies payable by other Members. The new Clearing House will require all proposed members to purchase Membership from it. The price for a General Clearing Member will be HK$7.5 million and the price for a Clearing Member will be HK$1.5 million. Non-Clearing Members will be free. The deposits made by Broker Lenders will be deemed to satisfy their respective obligations in respect of the purchase price in relation to their particular Membership. To the extent that any of them overpay under the arrangements reached with the Guarantee Corporation and the Government, the new Clearing House would intend to reimburse them, but only to the extent that resources are available to enable it to do so in future. As far as other Members of the Clearing House are concerned, they may also be allowed to pay for their Memberships in instalments in the first instance. The Membership purchase price is
non-refundable. However, Membership is capable of being sold in the open market and the Clearing House has the power (but no obligation) to buy back Memberships. In the normal course the Clearing House would intend to allocate the Membership purchase price to the Reserve Fund but if in future surpluses arise in that Fund, the Clearing House will not be obliged to appropriate monies to
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