ENG-1979 — Page 73

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FINANCE AND ECONOMY

ordinance was amended to provide for the introduction of a requirement for a minimum holding of specified liquid assets by such companies. The lists of specified liquid assets for deposit-taking companies and banks were also amended during the year,

Securities and Commodities Markets

Securities

Work continued in 1979 to prepare legislation to provide for the establishment of a unified exchange in place of the existing four stock exchanges. The legislation is expected to specify that a single new company should be formed, which will be recognised as a stock exchange from a specified date, the members of which will be its shareholders.

Staff of the Office of the Commissioner for Securities continued to monitor financial transactions concerning securities, and to scrutinise unusual movements in individual share prices. It is one of the functions of the office to investigate possible instances of insider dealing in securities to establish whether there is a prima facie case to be examined by the Insider Dealing Tribunal. No cases were referred to the tribunal in 1979.

In August, 1979, a Practice Note was published clarifying the rules concerning the suspension of dealings in the shares of offeree companies during takeover bids. During the year, the control of one company changed hands, and there were five instances where shareholders who already had control purchased outright the shares held by the other shareholders.

During 1979, the Office of the Commissioner for Securities continued to administer the Hong Kong Code on Unit Trusts and Mutual Funds. The number of unit trusts and mutual funds which received authorisation from the Securities Commission under the Securities Ordinance was 10.

The combined Stock Exchanges Compensation Fund - established to compensate those who suffer financial loss as a result of defaults by stockbrokers – amounted to $24 million at December 31, 1979. No payments were made from this fund during the year. Deposits lodged by dealers other than stockbrokers stood at $6.87 million. The purpose of these deposits is to give some protection to investors against a defaulting dealer who is not a member of a stock exchange.

At the end of 1979, 2,204 people were registered under the Securities (Dealers, Investment Advisers and Representatives) Regulations 1974. They included: 107 corporate dealers; 1,012 individual dealers including 898 stockbrokers on the four stock exchanges; 74 corporate investment advisers; 120 individual investment advisers; 822 dealers' representa- tives; and 69 investment representatives. During the year, five corporations were declared exempt dealers.

The turnovers for 1979 reported on the four exchanges were: Far East Exchange, $11,747.42 million; Hong Kong Stock Exchange, $5,607.09 million; Kam Ngan Stock Exchange, $8,217.31 million; and Kowloon Stock Exchange, $61.42 million. The total of $25,633.24 million is a decrease of 61 per cent compared with the 1978 figure of $27,457.89 million.

Proposals were being drafted in 1979 to update the Securities Ordinance and the Com- modities Trading Ordinance in the light of operational experience, so as to enhance the protection of investors.

Commodities Trading

The Hong Kong Commodity Exchange Limited is the only company which has been granted a licence to operate a commodity exchange to trade in futures contracts in Hong