ENG-1976 — Page 69

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FINANCIAL STRUCTURE

that the securities of a company shall not be listed on a local exchange unless the com- pany appoints as share registrar a member of the Federation of Share Registrars. Legislation on unit trusts and mutual funds is under way.

The members of the Securities Commission completed their two-year term early in 1976 and were re-appointed for another term.

Although the Hong Kong Code on Takeovers and Mergers does not have the force of law, it has received support from all those concerned since its inception in August 1975. During 1976 there were 11 takeovers including three offers by cash, one by cash and exchange of shares, and seven by means of a scheme of arrangement under the Companies Ordinance.

The combined Stock Exchanges Compensation Fund-established for the pur- pose of compensating those who suffer pecuniary loss as a result of default by stock- brokers—amounted to $25.8 million at the end of the year. This included a surplus of $1.8 million from investments which was subsequently distributed proportionately to the four stock exchanges. Up to the end of 1976 no payments had been made from the fund. Deposits lodged by dealers other than stockbrokers stood at $4.7 million. In addition, a surplus of more than half a million dollars was made and subsequently divided among the depositors. The purpose of the deposits is to give limited protection to investors against any default by dealers who are not members of a stock exchange. But, unlike the Compensation Fund, the deposits are not pooled.

At the end of 1976 there were 2,202 persons registered under the Securities (Dealers, Investment Advisers and Representatives) Regulations 1974. They included: 92 corporate dealers; 1,023 individual dealers, including 934 stockbrokers on the four stock exchanges; 45 corporate investment advisers; 81 individual investment advisers; 909 dealers' representatives; and 52 investment representatives. During the year 19 corporations were declared exempt dealers and four corporations were declared exempt investment advisers.

The turnovers for 1976 reported on the four exchanges were: Far East Exchange, $6,018.2 million; Hong Kong Stock Exchange, $3,188.7 million; Kam Ngan Stock Exchange, $3,755.5 million; and Kowloon Stock Exchange, $193.5 million. The total of $13,155.9 million is an increase of 27.3 per cent as compared with the previous year,

One company came to the market by way of private placement of shares. At the end of the year the shares of 294 companies, including 23 overseas companies, were listed on the four stock exchanges.

Commodities Trading

The Commodities Trading Ordinance was enacted on August 4, 1976. It is designed to permit the establishment of an international futures commodity exchange in Hong Kong and to regulate trading in commodity futures contracts. The ordinance provides for the establishment of a Commodities Trading Commission and a Com- missioner for Commodities Trading to be the regulatory authorities charged with implementing the provisions of the ordinance.