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(vii)-The List of Quotations.

The "Sales" column of the daily quotation list ought to include only transac- tions which are definitely authenticated. At present there is nothing to prevent the insertion of bogus quotations.

(viii)-Advertisements.

No member of an Exchange should be allowed to issue a circular or advertise-

ment to persons other than his own principals.

(ix)-Margin.

In view of the fact that in Hongkong brokers guarantee all transactions, it seems eminently desirable that there should be a rule in all the Exchanges whereby a broker is required to obtain from his client, at the time when any forward contract is made, a deposit equal to ten per cent of the amount of the contract plus brokerage and stamp duty and to require a further deposit if the price drops to near the ten per cent margin. The broker should be required forthwith to pay this money to the Committee of the Exchange and obtain a numbered receipt for it which he should at once send to the client. It has been stated by one of the witnesses and supported by another that the majority of the members of the Hougkong Stock Exchange are of opinion that this proposal "will hamper forward business to such a considerable extent as practically to cripple it and without forward business it will be impossible to keep the market up". This is an unsatisfactory point of view. What seems to be of importance is not "keeping the market up but ensuring that business shall only be entered into by persons who can honour their obligations. No doubt the "margin" rule would destroy a certain amount of forward business but only the unsound portion of it, that is, the business of persons who have no money with which to honour their bargains. The man who is able to pay if he loses should not object to depositing a margin.

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(x)--Deposits by brokers.

The requirement of a compulsory deposit by a broker would be some sort of a guarantee of his financial soundness. We do not recommend insistence on such a rule provided the margin rule under (ix) is rigidly enforced.

(xi)--The number of Exchanges and licensing of share brokers.

Opinion among us is divided as to whether it is desirable or not to have more than one Exchange in Hongkong for dealings in stocks and shares, and, as things are, the difficulties in the way of amalgamating the existing Exchanges are so great that we cannot recommend any change. Legally there is nothing to prevent individuals formning Associations or Limited Companies for the purpose of dealing in any commodity and it does not seem reasonable to attempt to restrict them from doing so for the purpose of dealing in stocks and shares. For the same reason it seems to be unnecessary to require share brokers to be licensed. If, however, the Exchanges do not proceed to adopt the recommendations made in this report or, having adopted them, do not take measures to enforce then, we consider that the Goverument might proceed to enact legislation of the kind indicated in paragraph 17. Such legislation should give the Court power to dissolve any Association of the kind referred to if, on the application of the Attorney General, the Court is satisfied that the rules have been persistently disregarded.

19. We wish to thank the gentlemen who have submitted memorauda for the consideration of the Commission. These memoranda, especially the one drawn up by Mr. J. P. Braga, contain valuable information which has been of great use to us.