(CHAPTER 250)CONTENTS
(CHAPTER 250)CONTENTS
Section
PART I PRELIMINARY
1. Short title
2. Interpretation
PART II
3-12. (Repealed)
PART III COMMODITY EXCHANGE
13. Licensing of the Commodity Exchange
14. Approval of amendments to the constitution, rules of the Exchange
Company, etc.
15. Appointment of chief executive of Exchange Company to be approved by
Commission
16. Restriction on business in a commodity market
17. Disqualifications from becoming or remaining shareholders
18. Revocation of licence issued under section 13
19. Closure of the Commodity Exchange for noncompliance with section 13
(3)
20. (Repealed)
21. Closure of the Commodity Exchange in an emergency
22. Publication of notice of revocation or closure
23. Dealings in commodities prohibited during closure of Commodity
Exchange
24. Prevention of entry into Commodity Exchange
25. Appeals
PART IV REGISTRATION OF DEALERS, COMMODITY TRADING ADVISERS AND
REPRESENTATIVES
26. Dealers to be registered
27. Commodity trading advisers to be registered
28. Dealer's representatives to be registered
29. Commodity trading adviser's representatives to be registered
30. Registration of persons under this Part
31. Deposits to be paid by dealers
32. Refusal of registration
33. Disposal and accounts of deposits paid under section 31 33A. Amendment
of conditions of certificate issued under section 30 (2)
34. (Repealed)
35. Revocation of registration
36. Powers of the Commission in relation to misconduct
37. Effect of revocation or suspension of registration
38-39. (Repealed)
40. False representations in obtaining registration
41. Information to be provided by registered persons
42. Commission to keep registers of registered persons
43. Publication of names of registered dealers, etc.
PART V ACCOUNTS AND AUDIT
44. Interpretation
45. Accounts to be kept by dealers
45A. Issue of contract notes
45B. Dealers to provide certain information, etc. to client
46. Monies to be paid into segregated accounts
47. Monies in segregated account not available for payment of debts, etc.
48. Claims and liens on segregated accounts not affected
49. Dealers to appoint auditors
49A. Notification of change of auditors
50. Dealers to lodge annual accounts, etc.
51. Reports by auditor to the Commission in certain cases
51A. Communication by auditor with Commission
52. Power of Commission to appoint auditor
53. Power of Commission to appoint an auditor on application of client
54. Auditor to report to the Commission
55. Powers of auditors appointed by the Commission
56. Offence to destroy, alter, etc. records
57. Restriction on auditor's and employee's right to communicate certain
matters
58. Exchange Company may impose additional obligations on members
PART VI TRADING PRACTICES
59. Fixing of trading and position limits
60. Offence to exceed limits
60A. Hawking of futures contracts
61. Dealing in options prohibited
62. False trading, etc.
63. Employment of fraudulent or deceptive devices, etc.
64. False or misleading statements
65. Offences
PART VII
66-75. (Repealed)
PART VIII COMPENSATION FUND
76. Interpretation
77. Establishment of compensation fund
78. Futures Compensation Fund Committee
79. Money constituting the compensation fund
79A. Contract levy
80. Money to be kept in bank account
81. Accounts of compensation fund
82. Exchange Company to make deposits in respect of shareholders
83. Investment of money in compensation fund
84. Effect of persons ceasing to be shareholders
85. Replenishment of compensation fund in certain cases
86. Payment out of the compensation fund
87. Claims against the compensation fund
88. Rights of innocent directors, etc. in relation to the compensation
fund
89. Notice calling for claims against the compensation fund
90. Power of the Exchange Company in respect of claims
91. Exchange Company may require production of documents, etc.
92. Court proceedings to establish a claim against the compensation fund
93. Supplementary provisions relating to court proceedings
94. Court order establishing the claim
95. Subrogation of the Commission to rights, etc. of claimant on payment
from the compensation fund
96. Payment of claims from the compensation fund only
97. Provision where the compensation fund is insufficient to meet claims
98. Power of Commission to return deposits on winding up of the Exchange
Company PART IX MISCELLANEOUS PROVISIONS
99. Procedure on appeal
100. Report of certain matters regarding shareholders
101. Notification by dealers of their financial year
102. Supply of copies of rules to the Commission
103. Production of records, etc., by the Exchange Company, etc.
104. Godown operators to keep records
105. (Repealed)
106. Prohibition of use of title "commodity exchange", etc.
107. Commodity trading advisory contracts
108. Obstruction
109. Regulations
110. Offence by corporations
111. Liability of corporation operating a clearing house
112. Liability of principal for act of agent
113. Provision against syndicated trading
114. Prosecution of offences
114A. Limitation on commencement of proceedings
115. Amendment of Schedule and sum specified in sections 31, 79, 82, 85
and 87
116. Exclusion of provisions of Gambling Ordinance
117. Transitional provisions Schedule 1 Schedule 2 To provide for the
establishment of a commodity exchange, to control the trading in commodity
futures contracts and to provide for matters connected therewith and
incidental thereto.
[Parts I, III, VI: 1 September 1976 L. N. 224 of
1976
Part I X: 1 October 1976 L. N. 253 of
1976
Part IV: 1 January 1977 L. N. 290 of
1976
Parts II, VII: 1 January 1977 L. N. 318 of
1976
Part V, other: 1 March 1977 L. N. 45 of 1977
than section 50
Part VIII: 27 April 1977 L. N. 89 of 1977
Section 50: 30 January 1980] L. N. 19 of 1980
PART I PRELIMINARY
1. Short title
This Ordinance may be cited as the Commodities Trading Ordinance.
2. Interpretation
(1) In this Ordinance, unless the context otherwise requires-
"auditor" means a professional accountant registered and holding a
practising certificate under the Professional Accountants Ordinance (Cap.
50);
"clearing house" means a clearing house for the registration and
settlement of futures contracts and the day-to-day adjustment of the
financial position of futures contracts which is used by the Exchange
Company in accordance with section 13 (3); (Replaced 61 of 1985 s. 2)
"Commission" means the Securities and Futures Commission established under
the Securities and Futures Commission Ordinance (Cap. 24); (Amended 10 of
1989 s. 65) "commodities trading" includes trading in commodity futures
contracts; (Added 61 of 1985 s. 2)
"commodity" includes any item, whether or not capable of being delivered,
which is listed or specified, as the case may be, in-
(a) the Schedule to the Commodity Exchanges (Prohibition) Ordinance (Cap.
82); or
(b) Part I of Schedule 1; or
(c) Part II of Schedule 1; (Replaced 61 of 1985 s. 2)
"Commodity Exchange" means the commodity exchange established and operated
by the Exchange Company under Part III;
"commodity market" means a place provided and maintained by the Exchange
Company for the trading in commodities generally or in particular
commodities, whether under futures contracts or otherwise;
"commodity trading adviser" means a person who acts as a commodity trading
adviser within the meaning of section 27 and who is registered as such
under this Ordinance; "commodity trading adviser's representative" means a
person who acts as a commodity trading adviser's representative within the
meaning of section 29 and who is registered as such under this Ordinance;
"compensation fund" means the compensation fund established under Part
VIII; "constitution", in relation to a company, means the memorandum and
articles of association of the company or other instrument providing the
constitution of the company;
"contract levy" means the levy imposed under section 79A; (Added 61 of
1985 s. 2) "corporation" means any company or other body corporate formed
or incorporated either in Hong Kong or elsewhere; but does not include-
(a) any body corporate that is incorporated in Hong Kong and is a public
authority or an organ or agency of the Crown;
(b) any corporation sole;
(c) any credit union registered under the Credit Unions Ordinance (Cap.
119); or
(d) any corporation registered under the Multistory Buildings
(Owners Incorporation) Ordinance (Cap. 344);
"dealer" means a person who acts as a dealer within the meaning of section
26 and who is registered as such under this Ordinance;
"dealer's representative" means a person who acts as a dealer's
representative within the meaning of section 28 and who is registered as
such under this Ordinance; "defalcation" means a misappropriation of
money, commodities or other property; "default", in relation to the
failure of a dealer or shareholder to perform a legal obligation, means a
default arising from-
(a) the bankruptcy or winding up, as the case may be, of the dealer or
shareholder;
(b) any breach of trust, defalcation, fraud or misfeasance committed by
the dealer or shareholder or by any director, partner or employee, as the
case may be, of the dealer or shareholder in respect of any money, futures
contract or other property of a person who is a client of the dealer or
shareholder;
"director" includes any person occupying the position of director by
whatever name called;
"Exchange Company" means the company licensed under section 13 (1) to
establish and operate the Commodity Exchange;
"financial year", in relation to any person, fund or account, means a
period not longer than 12 consecutive months which is adopted by or in
respect of that person, fund or account as the financial year for
accounting purposes;
"firm" means an unincorporate body of 2 or more persons-
(a) who have entered into partnership with one another within the meaning
of section 2 of the Partnership Ordinance (Cap. 38); or
(b) who have formed a limited partnership under the Limited Partnerships
Ordinance (Cap. 37) and registered it as such under that Ordinance,
and a reference to a partnership shall be construed as a reference to such
a partnership or limited partnership;
"futures contract" means either-
(a) a contract executed on a commodity exchange the effect of which is-
(i) that one party agrees to deliver to the other party at an agreed
future time an agreed commodity or quantity of a commodity, at an agreed
price; or
(ii) that the parties will make an adjustment between them at an agreed
future time according to whether an agreed commodity is worth more or less
or, as the case may be, stands higher or lower at that time than a level
agreed at the time of making of the contract, the difference being
determined in accordance with the rules of the commodity market in which
the contract is made; or
(b) an option on a contract of the kind described in paragraph (a) (i) or
(ii); (Replaced 61 of 1985 s. 2)
"guarantee corporation" means a corporation whose business includes the
provision of guarantee in respect of the fulfillment of futures contracts
and which is used by the Exchange Company in accordance with section 13
(3); (Replaced 61 of 1985 s. 2) "legal obligation" includes an obligation
arising under a contract, quasicontract or trust (including a constructive
trust);
"licensed bank" means a bank licensed under the Banking Ordinance (Cap.
155) to carry on banking business in Hong Kong;
"management committee" means the Board of Directors of the Exchange
Company; (Replaced 61 of 1985 s. 2)
"market committee", in relation to a commodity market, means the body of
persons authorized by the Exchange Company to supervise that commodity
market; (Amended 61 of 1985 s. 2)
"registered person" means a person who is registered under this Ordinance
as a dealer, dealer's representative, commodity trading adviser or
commodity trading adviser's representative, as the case may be;
"representative" means a dealer's representative or commodity trading
adviser's representative, as the case may be;
"restricted licence bank" means a company licensed as a restricted licence
bank under the Banking Ordinance (Cap. 155); (Added 3 of 1990 s. 55)
"rules of the commodity market" means the rules governing the conduct of
the commodity market concerned or persons who trade in commodity futures
contracts in the commodity or commodities concerned, by whatever name such
rules may be called and wherever contained; "rules of the Exchange
Company" means the rules governing the conduct of the Exchange Company or
its shareholders, by whatever name such rules may be called and wherever
contained;
"segregated account" means a segregated account kept under section 46;
"shareholder" means any person (whether an individual, corporation or
firm) who holds a share of the Exchange Company; (Amended 79 of 1976 s. 2)
"specified commodity" means any item, whether or not capable of being
delivered, which is specified in Part I of Schedule 1; (Replaced 61 of
1985 s. 2)
"trading in commodity futures contracts", in relation to any person
(whether acting as principal or agent), means making or offering to make
an agreement with any other person in Hong Kong, or inducing or attempting
to induce any other person in Hong Kong to enter into or offer to enter
into a futures contract. (Amended 61 of 1985 s. 2) (Amended 10 of 1989 s.
65; 3 of 1990 s. 55)
(2) For the purposes of this Ordinance, a director or employee of a
corporation, or a partner or employee of a firm, shall be deemed to be
accredited to the corporation or firm, as the case may be, if he is, in
his capacity as such director, partner or employee, duly authorized by the
corporation or firm to act for or on behalf of that corporation or firm
for the purpose of trading in commodity futures contracts, or as a dealer
or commodity trading adviser, as the case may be.
PART II 3-12. (Repealed 10 of 1989 s. 65)
PART III COMMODITY EXCHANGE
13. Licensing of the Commodity Exchange
(1) The Governor in Council may, on application made to him in writing by
the Exchange Company, issue a licence to establish and operate the
Commodity Exchange if he is satisfied that the Company complies with the
requirements specified in subsection (3).
(2) An application under subsection (1) shall be accompanied by-
(a) a copy of the constitution of the Company; and
(b) such other documents and information as may be required by the
Governor in Council for the purposes of issuing a licence under subsection
(1).
(3) The requirements referred to in subsection (1) are-
(a) that the objects contained in the constitution of the Company include
a provision for the establishment and operation of a commodity exchange;
(b) that the Company will-
(i) maintain to the satisfaction of the Commission an adequate and
properly equipped place of business;
(ii) provide and maintain commodity markets at places approved by the
Commission; (Replaced 61 of 1985 s. 4)
(iii) use one or more clearing houses for the registration and settlement
of futures contracts and the day-to-day adjustment of the financial
position of such contracts; (Amended 61 of 1985 s. 4)
(iv) use one or more guarantee corporations to guarantee fulfilment of
futures contracts; and (Replaced 61 of 1985 s. 4)
(v) use only clearing houses or guarantee corporations which have been
approved by the Commission for use by the Company in relation to
particular commodity markets; (Added 61 of 1985 s. 4)
(c) that the authorized share capital of the Company is not less than
$25,000,000 divided into shares and the issued capital of the Company is
not less than $3,000,000; (Amended 61 of 1985 s. 4)
(d) that the constitution of the Company provides for the exclusion from
membership of the Company of any person who would be disqualified under
section 17 from becoming a shareholder;
(e) that at least 20 shareholders of the Company will carry on the
business of trading in commodity futures contracts independently and in
competition with one another in any commodity market;
(f) that the constitution of the Company provides for the making of rules
applicable to the Company in its capacity of Exchange Company and of rules
of commodity markets;
(g) that the constitution of the Company provides that no rules of the
Exchange Company, and amendments thereto, will be effective unless
approved in writing by the Commission;
(h) that the constitution of the Company provides that no amendment of the
constitution of the Company will be effective unless approved in writing
by the Commission;
(i) that the Company will make the deposits required to be made to the
compensation fund established under Part VIII; (Amended 61 of 1985 s. 4)
(j) that the constitution of the Company provides for the making of rules
requiring shareholders to pay to the Company the contract levy at the rate
prescribed by the Commission from time to time; (Added 61 of 1985 s. 4)
(k) that the Company will pay to the Commission all sums received by it
from shareholders in respect of the contract levy. (Added 61 of 1985 s. 4)
14. Approval of amendments to the constitution, rules of the Exchange
Company, etc.
(1) No-
(a) amendment of the constitution of the Exchange Company;
(b) constitution of a clearing house or any amendment thereto;
(c) constitution of a guarantee corporation or any amendment thereto;
(d) rules of the Exchange Company or any amendment thereto;
(e) rules of a clearing house or any amendment thereto; or
(f) rules of a guarantee corporation or any amendment thereto,
shall have effect unless approved in writing by the Commission.
(2) The Exchange Company shall submit or cause to be submitted to the
Commission for its approval-
(a) every amendment of the constitution of the Exchange Company;
(b) the constitution of a clearing house and every amendment thereto;
(c) the constitution of a guarantee corporation and every amendment
thereto;
(d) the rules of the Exchange Company and every amendment thereto;
(e) the rules of a clearing house and every amendment thereto; and
(f) the rules of a guarantee corporation and every amendment thereto.
(3) The Commission shall, within 6 weeks after the receipt of any
submission under subsection (2), give notice in writing to the Exchange
Company of-
(Amended 64 of 1990 s. 2)
(a) its approval of; or
(b) its refusal to approve,
the constitution or amendment of the constitution, rules or amendment of
the rules, as the case may be, or any part thereof.
(4) The Commission may in a particular case, with the agreement of the
Exchange Company, extend the time prescribed in subsection (3). (Added 64
of 1990 s. 2)
(5) The Financial Secretary may, on the advice of the Commission and
either generally or in a particular case, extend the time prescribed in
subsection (3) (Added 64 of 1990 s. 2)
(Amended 61 of 1985 s. 5)
15. Appointment of chief executive of Exchange Company to be approved by
Commission No appointment of a person as chief executive of an Exchange
Company shall have effect unless such appointment is approved by the
Commission.
(Added 10 of 1989 s. 65)
16. Restriction on business in a commodity market
Unless otherwise authorized in writing by the Commission, the trading in
commodity futures contracts in a commodity market shall be in respect of
specified commodities only.
17. Disqualifications from becoming or remaining shareholders
(1) A corporation shall only be entitled to become or remain a shareholder
if it is incorporated in Hong Kong.
(2) A corporation which engages in any other business than that of
trading-
(a) in commodity futures contracts;
(b) on the Commodity Exchange; or
(c) for spot or deferred delivery in any specified commodity which is
capable of being delivered,
shall not be entitled to become or remain a shareholder.
(3) A firm shall not be entitled to become or remain a shareholder if-
(a) any partner in the firm is a corporation; and
(b) that corporation is not entitled under subsection (1) or (2) to become
or remain a shareholder.
(Replaced 61 of 1985 s. 7)
18. Revocation of licence issued under section 13
(1) Subject to subsection (2), the Commission may revoke the licence
issued under section 13 if the Exchange Company-
(a) ceases to comply with any requirement specified in subsection (3) of
that section;
(aa) fails to pay the contract levy in accordance with rules made under
section 79A (2); (Added 61 of 1985 s. 8)
(b) ceases to operate the Commodity Exchange; or
(c) is being wound up.
(2) The Commission shall give to the Exchange Company not less than 14
days' notice in writing of its intention to revoke the licence under
subsection (1) and the notice shall specify the grounds for revocation.
19. Closure of the Commodity Exchange for noncompliance with section 13
(3)
(1) Where the Exchange Company ceases to comply with any requirement
specified in section 13 (3), the Commission may, instead of revoking the
licence under section 18 direct the Exchange Company that the Commodity
Exchange be closed forthwith for the transaction of any trading in
commodity futures contracts specified in the direction until such time as
the Exchange Company has, to the satisfaction of the Commission, complied
with such requirement.
(2) The Commission shall give to the Exchange Company not less than 14
days' notice in writing of its intention to direct the closure of the
Commodity Exchange under subsection (1) and the notice shall specify the
grounds for closure.
20. (Repealed 10 of 1989 s. 65)
21. Closure of the Commodity Exchange in an emergency
(1) The Commission, after consultation with the Exchange Company, may
direct the Exchange Company that the Commodity Exchange be closed for a
period not exceeding 5 bank working days for the transaction of any
trading in commodity futures contracts specified in the direction if the
Commission is of the opinion that the orderly transaction of such trading
is being or is likely to be prevented because-
(a) an emergency or natural disaster has occurred in Hong Kong, or
(b) there exists an economic or financial crisis or any other
circumstance, whether in Hong Kong or elsewhere.
(2) The Commission may extend the closure of the Commodity Exchange under
subsection (1) for further periods not exceeding 5 bank working days.
(3) The Commission shall specify the grounds for closure in the direction
given under subsection (1) and the grounds for any extension of the
closure under subsection (2). (Amended 10 of 1989 s. 65)
22. Publication of notice of revocation or closure
Where-
(a) a licence is revoked under section 18; or
(b) the Exchange Company is directed to close the Commodity Exchange under
section 19 or 21,
the Commission shall publish in the English and Chinese languages in such
manner as it thinks fit a notice of such revocation of the licence or the
particulars of the direction for the closure of the Commodity Exchange, as
the case may be. (Amended 10 of 1989 s. 65)
23. Dealings in commodities prohibited during closure of Commodity
Exchange
(1) Notwithstanding any other provision of this Ordinance, no person shall
in any manner transact any trading in commodity futures contracts of the
type specified in a direction under section 19 or 21 during the period of
the closure of the Commodity Exchange. (Amended 10 of 1989 s. 65)
(2) Any person who contravenes subsection (1) shall be guilty of an
offence and shall be liable on conviction to a fine of $50,000.
24. Prevention of entry into Commodity Exchange
(1) Where the Commodity Exchange is closed under section 19 or 21 for the
transaction of any trading in commodity futures contracts, an authorized
officer of the Commission or any police officer not below the rank of
superintendent may, during the period the closure is effective, take such
steps as may be necessary to ensure that the premises of the Commodity
Exchange provided for the transaction of such trading are locked and
secured.
(2) Any person who, without the authority of an authorized officer of the
Commission or a police officer not below the rank of superintendent,
enters any premises which are locked and secured under subsection (1)
shall be guilty of an offence and shall be liable on conviction to a fine
of $50,000.
(Amended 10 of 1989 s. 65; L. N. 259 of 1989)
25. Appeals
Where-
(a) a licence is revoked under section 18 or 20; or
(b) the Exchange Company is directed to close the Commodity Exchange under
section 19 or 20,
the Exchange Company may appeal to the Governor in Council against
decision of the Commission, and the Governor in Council may confirm, vary
or reverse the decision and give such other directions as it thinks just
and equitable.
(Replaced 10 of 1989 s. 65)
PART IV REGISTRATION OF DEALERS, COMMODITY TRADING ADVISERS AND REPRESENTATIVES
26. Dealers to be registered
(1) Subject to subsections (2), (3) and (4), no person, whether as
principal or agent, shall-
(a) carry on a business of trading in commodity futures contracts; or
(b) hold himself out as carrying on such a business,
unless such person is registered as a dealer under this Ordinance.
(2) No corporation that is a dealer shall carry on business as a dealer
unless every director or employee who is accredited to the corporation is
registered as a dealer under this Ordinance.
(3) No firm that is a dealer shall carry on business as a dealer unless
every partner or employee who is accredited to the firm is registered as a
dealer under this Ordinance.
(4) Subsection (1) shall not apply to-
(a) a person who trades otherwise than as agent in commodity futures
contracts only through a dealer registered under this Ordinance; (Amended
54 of 1980 s. 2)
(b) to any trading in commodity futures contracts on a commodity exchange
referred to in section 3 (a), (b) or (c) of the Commodity Exchanges
(Prohibition) Ordinance (Cap. 82); (Amended 54 of 1980 s. 2)
(c) to a person who trades in commodity futures contracts on a commodity
exchange which was in operation on 20 June 1973 as a member of such
commodity exchange. (Added 54 of 1980 s. 2)
(5) Any person who contravenes this section shall be guilty of an offence
and shall be liable-
(a) on conviction upon indictment to a fine of $500,000 and to
imprisonment for 5 years and, in the case of a continuing offence, to a
further fine of $10,000 for each day during which the offence continues;
and
(b) on summary conviction to a fine of $50,000 and to imprisonment for 1
year and, in the case of a continuing offence, to a further fine of $1,000
for each day during which the offence continues. (Amended 54 of 1980 s. 2;
35 of 1982 s. 2)
(6) Any futures contract made by any person, whether as principal or
agent, who is required to be registered under subsection (1) and who is
not registered as so required, may be rescinded by any other party to the
contract who, upon so doing, shall be entitled to recovery of any money or
other thing he may have paid or delivered under the contract.
(7) In this section "futures contract" includes a futures contract (or a
contract represented as being a futures contract) in respect of an item,
whether or not capable of being delivered, which is prescribed by the
Commission for the purposes of this definition. (Replaced 61 of 1985 s.
10)
27. Commodity trading advisers to be registered
(1) Subject to subsections (2) and (3), no person shall-
(a) for remuneration carry on a business of advising any other person
concerning the purchase or sale of futures contracts;
(b) for remuneration as part of a regular business issue or circulate
analyses or reports concerning the purchase or sale of futures contracts;
(c) for remuneration pursuant to a contract or arrangement with a client,
undertake on behalf of the client the management of a portfolio of
commodities or futures contracts, including the arranging of purchase,
sale, exchange or storage of commodities, or (Amended 61 of 1985 s. 11)
(d) hold himself out as carrying on the business referred to in paragraph
(a), unless such person is registered as a commodity trading adviser under
this Ordinance. (Amended 10 of 1989 s. 65)
(2) Subsection (1) (a) shall not apply to the giving of advice concerning
the purchase or sale of futures contracts by a dealer to his client, if
such activity is incidental to his carrying on business as a dealer.
(3) Subsection (1) (a) and (b) shall not apply to the proprietor or
publisher of, or contributor to, a publication that is generally available
to the public otherwise than on subscription who only in that publication
advises other persons concerning the purchase or sale of futures
contracts, or issues or circulates analyses or reports concerning the
purchase and sale of futures contracts, not being a proprietor or
publisher of, or contributor to, a publication whose principal or only
object is to advise others concerning the purchase or sale of futures
contracts, or to issue or circulate analyses or reports concerning the
purchase and sale of futures contracts. In this subsection "publication"
means a bona fine newspaper, magazine, journal or other periodical
publication.
(4) Any person who contravenes subsection (1) shall be guilty of an
offence and shall be liable on conviction to a fine of $20,000 and, in the
case of a continuing offence, to a further fine of $200 for each day
during which the offence continues. (Amended 54 of 1980 s. 5)
28. Dealer's representatives to be registered
(1) No person shall perform for a dealer any of the functions of a dealer
within the meaning of section 26 (other than work ordinarily performed by
an accountant, clerk or cashier) for remuneration by way of salary,
commission or otherwise-
(a) in the case of a person (not being a dealer) who is an employee of,
or acts for or by arrangement with, a dealer who is an individual;
(b) in the case of a person (not being a dealer) who is an employee of a
corporation that is a dealer; or
(c) in the case of a person (not being a dealer) who is an employee of a
firm that is a dealer,
unless such person is registered as a dealer's representative under this
Ordinance.
(2) Any person who contravenes subsection (1) shall be guilty of an
offence and shall be liable-
(a) on conviction upon indictment to a fine of $100,000 and to
imprisonment for 2 years and, in the case of a continuing offence, to a
further fine of $2,500 for each day during which the offence continues;
and
(b) on summary conviction to a fine of $20,000 and, in the case of a
continuing offence, to a further fine of $500 for each day during which
the offence continues. (Amended 54 of 1980 s. 2; 35 of 1982 s. 2)
29. Commodity trading adviser's representatives to be registered
(1) No person shall perform for a commodity trading adviser any of the
functions of a commodity trading adviser within the meaning of section 27
(other than work ordinarily performed by an accountant, clerk or cashier)
for remuneration by way of salary, commission or otherwise-
(a) in the case of a person (not being a commodity trading adviser) who is
an employee of, or acts for or by arrangement with, a commodity trading
adviser who is an individual;
(b) in the case of a person (not being a commodity trading adviser) who is
a director or employee of a corporation that is a commodity trading
adviser; or
(c) in the case of a person (not being a commodity trading adviser) who is
a partner or employee of a firm that is a commodity trading adviser.
unless such person is registered as a commodity trading adviser's
representative under this Ordinance.
(2) Any person who contravenes subsection (1) shall be guilty of an
offence and shall be liable on conviction to a fine of $10,000 and, in the
case of a continuing offence, to a further fine of $100 for each day
during which the offence continues. (Amended 54 of 1980 s. 5)
30. Registration of persons under this Part
(1) Subject to sections 31 and 32, the Commission shall, on application
made to it by any person in the prescribed manner and on payment of the
prescribed fee, register that person as-
(a) a dealer;
(b) a commodity trading adviser;
(c) a dealer's representative; or
(d) a commodity trading adviser's representative,
as the case may be.
(2) The Commission shall issue to a person registered under subsection (1)
an appropriate certificate of registration which shall be subject to such
conditions as the Commission thinks fit. (Replaced 10 of 1989 s. 65)
(3) A certificate of registration issued to a dealer or commodity trading
adviser shall specify the name of the person thereby authorized to carry
on a business as a dealer or commodity trading adviser, as the case may
be.
(4) The issue of a certificate of registration to a person shall not
authorize such person to carry on that business under any name other than
that specified in the certificate.
(5) Notwithstanding subsection (4), if the Commission thinks fit, a
certificate of registration to which that subsection relates may, at the
request of the applicant for registration, authorize the applicant to
carry on business as a dealer or commodity trading adviser, either alone
or jointly with any other person who is a registered dealer or registered
commodity trading adviser, as the case may be, under such name or style as
the applicant may specify.
(6) This section shall be construed and have effect subject to sections
23, 25 and 27 (1) (b) of the Securities and Futures Commission Ordinance
(Cap. 24). (Added 10 of 1989 s. 65)
(Amended 10 of 1989 s. 65)
31. Deposits to be paid by dealers
(1) Subject to subsection (2), the Commission shall refuse to register an
applicant as a dealer under section 30, unless-
(a) in the case of an applicant (not being an applicant specified in
paragraph (b)) who is an individual-
(i) he is a shareholder of the Exchange Company or member of any exchange
specified in Schedule 2; and
(ii) he has paid to the Commission a deposit of $100,000 in cash;
(b) in the case of an applicant who is a director or employee of a
corporation, or a partner or employee of a firm, and who is accredited to
the corporation or firm, as the case may be, as a dealer-
(i) the corporation or firm is a shareholder of the Exchange Company or
member of any exchange specified in Schedule 2, or the corporation is
wholly owned by such a member; and
(ii) the corporation or firm has paid to the Commission a deposit of
$100,000 in cash on the registration of the corporation or firm as a
dealer;
(c) in the case of an applicant that is a corporation or firm-
(i) the corporation or firm is a shareholder of the Exchange Company or
member of any exchange specified in Schedule 2, or the corporation is
wholly owned by such a member; and
(ii) the corporation or firm has paid to the Commission a deposit of
$100,000 in cash.
(2) The following applicants shall not be required to pay the deposit
under subsection (1)-
(a) an applicant that is a corporation, if any director or employee
accredited to the corporation as a dealer has paid such deposit;
(b) an applicant that is a firm, if any partner or employee accredited to
the firm as a dealer has paid such deposit;
(c) an applicant who is a shareholder, if the Exchange Company has made in
respect of the shareholder a deposit to the compensation fund under Part
VIII;
(d) an applicant who is accredited to a shareholder as a dealer, if the
Exchange Company has made in respect of the shareholder a deposit to the
compensation fund under Part VIII.
(Amended 10 of 1989 s. 65)
32. Refusal of registration
(1) The Commission may refuse to register an applicant under section 30-
(a) in the case of an applicant who is an individual, on the grounds that-
(i) the applicant has not provided the Commission with such information
relating to him or any person employed by or associated with him for the
purposes of his business, and to any circumstances likely to affect his
method of conducting business, as may be prescribed by or under this
Ordinance;
(ii) the applicant is an undischarged bankrupt or has committed an act of
bankruptcy within the meaning of section 3 of the Bankruptcy Ordinance
(Cap. 6) or has made a composition or arrangement with his creditors;
(iii) the applicant does not have the financial resources, in respect of
the business for which he applies for registration, specified in any rules
made under section 28 of the Securities and Futures Commission Ordinance
(Cap. 24) which are then in force and which would be applicable to him if
his application for registration were granted; or (Replaced 10 of 1989 s.
65)
(iv) the applicant has not for the purposes of section 27 of the
Securities and Futures Commission Ordinance (Cap. 24) notified the
location of business premises at which every record or other document
relating to the business in respect of which he applies to be registered
is to be kept, such location not being, in the opinion of the Commission,
unsuitable having regard to the purposes of section 30 of that Ordinance;
or (Replaced 10 of 1989 s. 65)
(b) in the case of an applicant that is a corporation, on the grounds
that-
(i) the applicant has not provided the Commission with such information
relating to it or any person employed by or associated with it for the
purposes of its business, and to any circumstances likely to affect its
method of conducting business, as may be prescribed by or under this
Ordinance;
(ii) any director or employee of the applicant who applies to be
registered as a dealer in his capacity as such director or employee, as
the case may be, would be refused registration under paragraph (a) (ii);
(iii) the applicant has at any time prior to the application entered into
any composition or scheme of arrangement with its creditors;
(iv) the applicant does not have the financial resources, in respect of
the business for which he applies for registration, specified in any rules
made under section 28 of the Securities and Futures Commission Ordinance
(Cap. 24) which are then in force and which would be applicable to him if
his application for registration were granted; or (Replaced 10 of 1989 s.
65)
(v) the applicant has not for the purposes of section 27 of the Securities
and Futures Commission Ordinance (Cap. 24) notified the location of
business premises at which every record or other document relating to the
business in respect of which he applies to be registered is to be kept,
such location not being, in the opinion of the Commission, unsuitable
having regard to the purposes of section 30 of that Ordinance; or
(Replaced 10 of 1989 s. 65)
(c) in the case of an applicant that is a firm, on the grounds that-
(i) the applicant has not provided the Commission with such information
relating to it or any person employed by or associated with it for the
purposes of its business, and to any circumstances likely to affect its
methods of conducting business, as may be prescribed by or under this
Ordinance;
(ii) any partner or employee of the applicant who applies to be registered
as a dealer in his capacity as such partner or employee, as the case may
be, would be refused registration under paragraph (a) (ii);
(iii) the applicant has at any time prior to the application entered into
any composition or scheme of arrangement with its creditors;
(iv) the applicant does not have the financial resources, in respect of
the business for which it applies for registration, specified in any rules
made under section 28 of the Securities and Futures Commission Ordinance
(Cap. 24) which are then in force and which would be applicable to it if
its application for registration were granted; or (Replaced 10 of 1989 s.
65)
(v) the applicant has not for the purposes of section 27 of the Securities
and Futures Commission Ordinance (Cap. 24) notified the location of
business premises at which every record or other document relating to the
business in respect of which it applies to be registered is to be kept,
such location not being, in the opinion of the Commission, unsuitable
having regard to the purposes of section 30 of that Ordinance. (Replaced
10 of 1989 s. 65)
(2) The Commission shall not refuse to register an applicant under
subsection (1) without first giving the applicant an opportunity of being
heard.
(3) Where the Commission refuses to register an applicant under subsection
(1), it shall notify the applicant in writing to that effect stating the
reasons for the refusal. (Amended 10 of 1989 s. 65)
33. Disposal and accounts of deposits paid under section 31
(1) Subject to subsection (14), if-
(a) an individual who is a dealer becomes bankrupt, the Commission shall
transfer the deposit paid by or in respect of such individual under
section 31 to his trustee in bankruptcy;
(b) a corporation or firm that is a dealer is ordered to be wound up or
dissolved by or under the supervision of a court, the Commission shall
transfer the deposit paid by or in respect of such corporation or firm
under section 31 to the liquidator of the corporation or firm; or
(c) the Commission has reason to believe that any person has sustained
pecuniary loss because of a default committed in the course of or in
connection with the commodity futures trading business of a dealer, by the
dealer or any director, partner or employee, as the case may be,
accredited to the dealer, the Commission may forfeit all or any part of
the deposit paid by or in respect of the dealer under section 31.
(2) Where a deposit is transferred to a trustee in bankruptcy under
subsection
(1) (a), or liquidator under subsection (1) (b), such deposit shall be
applied by the trustee or liquidator, as the case may be, in accordance
with regulations made under this Ordinance for the purposes of this
subsection.
(3) In the event of a deposit or any part of a deposit being forfeited
under subsection (1) (c), the deposit or part thereof so forfeited shall
be applied by the Commission in accordance with regulations made under
this Ordinance for the purposes of this subsection.
(4) Where any deposit is transferred or forfeited under subsection (1),
the Commission shall notify in writing the person who paid the deposit of
such transfer or forfeiture.
(5) Except as provided in this section or under regulations made under
this Ordinance, no person may withdraw or transfer any deposit paid under
section 31.
(6) The Commission shall open one or more accounts at a licensed bank into
which it shall pay all deposits paid under section 31, and shall then
ascertain what proportion of such deposits ought, in its opinion, to be
retained in the account or accounts to enable liabilities under subsection
(1), or such other liabilities as may be prescribed by regulations, to be
satisfied.
(7) After ascertaining the amount of a deposit required to be retained
under subsection (6), the Commission shall cause the balance of the
deposit to be invested in such manner as it thinks fit.
(8) Where the Commission has invested the balance of the deposit under
subsection (7), it shall, as soon as practicable after the end of each
financial year, by notice in the Gazette, -
(a) declare a rate of interest to be paid for that financial year in
respect of each deposit paid under section 31;
(b) specify the manner and time of payment of that interest; and
(c) specify an amount to be charged for management expenses incurred by
the Commission in administering the deposit under this Ordinance.
(9) As soon as practicable after the publication of a notice under
subsection (8), the Commission shall, after deducting an appropriate
amount chargeable in respect of management expenses, pay to each person
who has paid the deposit under section 31, or to that person's duly
authorized agent or personal representative, the appropriate amount of
interest due in respect of that deposit for the financial year in
question.
(10) A document evidencing the investment of money under subsection (7)
may be kept in the office of the Commission or deposited for safe keeping
with a licensed bank.
(11) If any person who has paid a deposit under section 31, or in respect
of whom such deposit was paid, ceases to be registered as a dealer and the
deposit has not been or is not required to be disposed of under subsection
(1), the person who paid the deposit, or his duly authorized agent or
personal representative, may apply to the Commission for the deposit to be
released to him.
(12) On making an application under subsection (11), the applicant shall-
(a) satisfy the Commission by a statutory declaration-
(i) that he knows of no other person who has made or is entitled to make a
claim in respect of the deposit;
(ii) if he is not the person who paid the deposit, that he is entitled to
give a good discharge for the deposit and state the circumstances in which
he is so entitled; and
(b) provide the Commission with such information as will satisfy it that
an advertisement in a form approved by it has been published once in an
English language newspaper, and once in a Chinese language newspaper,
circulating in Hong Kong.
(13) The Commission, on being so satisfied, shall cause the deposit to be
released to the applicant.
(14) Subsection (1) shall not apply where the bankruptcy, winding up or
dissolution, or default, as the case may be, occurs prior to the
commencement of this section.
(15) The Commission shall keep proper accounts of all sums deposited under
section 31, and shall in respect of the financial year beginning before
and ending after the day on which this section commences, and in respect
of each subsequent financial year, prepare a revenue and expenditure
account, and a balance sheet made up to the last day of that year.
(16) The Commission shall appoint an auditor who shall annually audit the
accounts kept under subsection (15) and shall audit and prepare an
auditor's report in respect of each balance sheet and revenue and
expenditure account prepared under subsection (15) and shall submit the
report to the Commission.
(17) (Repealed 10 of 1989 s. 65)
(Amended 10 of 1989 s. 65)
33A. Amendment of conditions of certificate issued under section 30 (2)
Without limiting the generality of section 30 (2), the Commission may at
any time, by a notice in writing served on the holder of a certificate
issued under that section, attach to the certificate such conditions, or
amend or cancel any condition to which the certificate is then subject, as
it shall think fit.
(Added 10 of 1989 s. 65)
34. (Repealed 10 of 1989 s. 65)
35. Revocation of registration
(1) The registration of a registered person is deemed to be revoked, in
the case of-
(a) an individual, if the individual dies;
(b) a corporation, if the corporation is wound up;
(c) a firm, if the partnership is dissolved.
(2) The Commission may revoke the registration of a registered person-
(a) in the case of a registered person who is an individual-
(i) on any ground on which the Commission may refuse to register under
section 32 (1) (a);
(ii) if a levy of execution in respect of him has not been satisfied;
(iii) if he does not carry on the business for which he was registered; or
(Amended 25 of 1992 s. 2)
(iv) if, in the case of a representative, the registration of the dealer
or commodity trading adviser, in relation to whom the certificate of
registration of the representative was granted, is revoked;
(b) in the case of a registered person that is a corporation-
(i) on any ground on which the Commission may refuse to register under
section 32 (1) (b);
(ii) if it is being or will be wound up;
(iii) if a levy of execution in respect of it has not been satisfied;
(iv) if it has entered into any composition or scheme of arrangement with
its creditors; or
(v) if it does not carry on the business for which it was registered; or
(Amended 25 of 1992 s. 2)
(c) in the case of a registered person that is a firm-
(i) on any ground on which the Commission may refuse to register under
section 32(1)(c);
(ii) if the partnership is being or will be dissolved;
(iii) if a levy of execution in respect of it has not been satisfied;
(iv) if it has entered into any composition or scheme of arrangement with
its creditors; or
(v) if it does not carry on the business for which it was registered.
(Amended 25 of 1992 s. 2)
(3) The Commission may revoke the registration of a registered person at
the request of such person.
(4) The Commission shall not revoke the registration of a registered
person under subsection (2) without first giving such person an
opportunity of being heard.
(5) Where the Commission revokes the registration of a registered person
under subsection (2) it shall notify such person in writing to that effect
stating the reasons for the revocation and specifying the date on which
the revocation shall take effect. (Amended 10 of 1989 s. 65)
36. Powers of the Commission in relation to misconduct
(1) The Commission may at any time make inquiry concerning any of the
following matters-
(a) whether a registered person-
(i) has provided the Commission, whether before or after becoming
registered under this Ordinance or the Securities and Futures Commission
Ordinance (Cap. 24), with such information relating to him, and to any
circumstances likely to affect his method of conducting business, as may
be required by or under either of those Ordinances;
(ii) is or has been guilty of any misconduct; or
(iii) is a fit and proper person to continue to remain registered by
reason of any other circumstances;
(b) whether, in the case of a registered person that is a corporation or
firm, any director, partner or person concerned in the management of the
corporation or firm-
(i) is or has been guilty of any misconduct; or
(ii) is a fit and proper person to be a director, partner or person
concerned in the management of the corporation or firm.
(2) After making such inquiry in respect of a registered person, or where
such person is deemed to be guilty of misconduct for the purposes of this
section under subsection (6), the Commission may if it thinks fit-
(Amended 62 of 1990 s. 37)
(a) revoke the registration of the person;
(b) suspend the registration of the person for such time, or until the
happening of such event, as it may determine; or
(c) reprimand him or, in the case of a registered person that is a
corporation or firm, reprimand any director, partner or person concerned
in its management.
(3) The Commission shall not impose any penalty under subsection (2)
without first giving the registered person and, in the case of a
registered person that is a corporation or firm, any director, partner or
person concerned in its management, an opportunity of being heard.
(4) Every decision of the Commission imposing a penalty under subsection
(2) on a person shall be notified to that person in writing and shall
include a statement of the reasons on which it is based.
(5) For the purposes of this section "misconduct" means-
(a) any failure to comply with the requirements of this Ordinance or the
Securities and Futures Commission Ordinance (Cap. 24) or any regulations
made thereunder with respect to dealers, commodity trading advisers,
dealers' representatives or commodity trading advisers' representatives,
as the case may be;
(b) any failure to observe the terms and conditions of a certificate of
registration;
(c) any act or omission relating to the conduct of business of a dealer,
commodity trading adviser, dealer's representative or commodity trading
adviser's representative, as the case may be, which is or is likely to be
prejudicial to the interest of members of the investing public.
(6) Where a person has been identified as an insider dealer, in a written
report of the Insider Dealing Tribunal prepared under section 22 (1) of
the Securities (Insider Dealing) Ordinance (Cap. 395) such person shall be
deemed to be guilty of misconduct for the purposes of this section, (Added
62 of 1990 s. 37)
(Replaced 10 of 1989 s. 65)
37. Effect of revocation or suspension of registration
(1) (Repealed 10 of 1989 s. 65)
(2) A revocation or suspension of the registration of a person does not
operate so as to-
(a) avoid or affect any agreement, transaction or arrangement relating to
the trading in commodity futures contracts entered into by such person,
whether the agreement, transaction or arrangement was entered into before
or after the revocation or suspension of the registration; or
(b) affect any right, obligation or liability arising under any such
agreement, transaction or arrangement.
(3) A person whose registration is revoked under section 35 (other than
paragraph (a) (iii) or (iv), paragraph (b) (ii) or (v) or paragraph (c)
(ii) or (v) of subsection (2) of that section) or 36 may not apply to be
registered under this Part, whether as a dealer, commodity trading
adviser, dealer's representative or commodity trading adviser's
representative, until the expiration of at least 12 months from the date
of revocation.
38-39. (Repealed 10 of 1989 s. 65)
40. False representations in obtaining registration
(1) Any person who for the purpose of obtaining registration or renewal of
registration under this Part, whether for himself or for any other person,
makes any representation, whether in writing, orally or otherwise, which
he knows to be false or misleading as to a material particular shall be
guilty of an offence, and shall be liable on conviction upon indictment to
a fine of $20,000 and to imprisonment for 2 years.
(2) For the purposes of subsection (1), "representation" means a
representation or statement-
(a) of a matter of fact, either present or past;
(b) about a future event; or
(c) about an existing intention, opinion, belief, knowledge or other state
of mind.
(3) Proceedings in respect of an offence under this section may be brought
at any time within 6 months of the discovery of the offence.
41. Information to be provided by registered persons
(1) Every dealer, commodity trading adviser, dealer's representative and
commodity trading adviser's representative shall forthwith notify the
Commission in the prescribed form of any change which, while his
certificate of registration is in force, may occur-
(a) in the address in Hong Kong at which he carries on the business as a
dealer, commodity trading adviser, dealer's representative or commodity
trading adviser's representative;
(b) in the business name of the name or the corporation or firm; or
(c) in any information supplied in or in connection with his application
for registration or renewal of registration,
as the case may be.
(2) Every dealer, commodity trading adviser, dealer's representative and
commodity trading adviser's representative shall forthwith, on ceasing to
carry on business in Hong Kong as a dealer, commodity trading adviser,
dealer's representative or commodity trading adviser's representative, as
the case may be, notify the Commission in the prescribed form of that
fact.
(3) If, at any time while a corporation or firm is registered as a dealer
or commodity trading adviser, any director, partner or employee of the
corporation or firm becomes or ceases to be accredited to the corporation
or firm, as the case may be, the corporation or firm shall within 7 days
after that event notify the Commission in the prescribed form of the name
and address of that director, partner or employee and such other
particulars as may be specified in the form.
(4) If a dealer's representative or commodity trading adviser's
representative becomes or ceases to be the representative of the dealer or
commodity trading adviser in respect of whom he was registered, that
representative and the dealer or commodity trading adviser, as the case
may be, shall within 7 days after that event notify the Commission in the
prescribed form of the fact.
(5) Any person who without reasonable excuse contravenes this section
shall be guilty of an offence and shall be liable on conviction to a fine
of $2,000. (Amended 10 of 1989 s. 65)
42. Commission to keep registers of registered persons
(1) The Commission shall establish and maintain at its office-
(a) a register of dealers in which shall be entered the name of every
dealer and such other particulars as may be prescribed by regulations in
relation to dealers;
(b) a register of commodity trading advisers in which shall be entered the
name of every commodity trading adviser and such other particulars as may
be prescribed by regulations in relation to commodity trading advisers;
(c) a register of dealers' representatives in which shall be entered the
name of every dealer's representative and such other particulars as may be
prescribed by regulations in relation to dealers' representatives; and
(d) a register of commodity trading advisers' representatives in which
shall be entered the name of every commodity trading adviser's
representative and such other particulars as may be prescribed by
regulations in relation to commodity trading advisers' representatives.
(2) The registers kept under this section and all applications made by
registered persons for registration or renewal of registration shall,
during such hours as may be prescribed and on payment of any prescribed
fee, be open to inspection by members of the public.
(3) A copy of any extract of or entry in any register kept under this
section, purporting to be certified by the Commission, shall be admissible
as evidence in any legal proceedings, whether under this Ordinance or
otherwise.
(Amended 10 of 1989 s. 65)
43. Publication of names of registered dealers, etc.
(1) The Commission shall cause to be published in the Gazette, in such
manner as it thinks fit, the names and addresses of all registered
persons.
(2) The information required to be published under subsection (1) shall be
published at least once in each year.
(3) If the Commission at any time amends any register kept by it under
this Part by adding or removing the name of any person, it shall cause
particulars of the amendment to be published in the Gazette within 1 month
after making the amendment. (Amended 10 of 1989 s. 65)
PART V ACCOUNTS AND AUDIT
44. Interpretation
In this Part, unless the context otherwise requires-
"client" means a person on whose account a dealer carries on any trading
in commodity futures contracts as an agent;
"dealer" does not include a director, partner or employee of a corporation
or firm, as the case may be, who is accredited to the corporation or firm
as a dealer.
45. Accounts to be kept by dealers
(1) A dealer shall-
(a) cause to be kept such accounting and other records as will
sufficiently explain the transactions, and reflect the financial position,
of the business of trading in commodity futures contracts carried on by
him, and will enable true and fair profit and loss accounts and balance
sheets to be prepared from time to time; and
(b) cause those records to be kept in such a manner as will enable them to
be conveniently and properly audited.
(2) The records referred to in subsection (1) shall be kept-
(a) in writing in the English language; or
(b) in such a manner as to enable them to be readily accessible and
readily converted into written form in the English language.
(3) Without prejudice to the generality of subsection (1), a dealer shall
cause records to be kept-
(a) in sufficient detail to show particulars of-
(i) all amounts received and paid by the dealer, including amounts paid to
and disbursed from a segregated account;
(ii) all purchases and sales of futures contracts made by the dealer, and
the charges and credits arising from them; and
(b) in sufficient detail to show separately particulars of all
transactions by the dealer with, or for the account of-
(i) the clients of the dealer; and
(ii) the dealer himself.
(4) A dealer shall retain-
(a) for a period of not less than 7 years, the records kept in accordance
with this section; and
(b) for a period of not less than 2 years-
(i) a copy of each futures contract made out by him as agent of a client;
and
(ii) each futures contract received by him or made out to himself as
principal.
(5) Records required to be kept by a dealer by this section may be kept
either by making entries in a bound book or by recording or storing the
relevant matters in any other manner, and anything so entered, recorded or
stored shall be deemed to have been effected by, or with the authority of,
the dealer.
(6) Where a record required to be kept by this section is not kept by
making entries in a bound book but by some other means, the dealer shall
take reasonable precautions for guarding against falsification and for
facilitating discovery of any falsification.
(7) Notwithstanding any other provision of this section, a dealer shall
not be deemed to have failed to keep a record in accordance with this
section by reason only that the record is kept as a part of, or in
conjunction with, the records relating to any business, other than the
business of trading in commodity futures contracts, that is carried on by
him.
(8) Any dealer who, without reasonable excuse, contravenes this section
shall be guilty of an offence and shall be liable on conviction upon
indictment to a fame of $10,000 and to imprisonment for 6 months.
(9) If, in any records kept in accordance with this section, a person
willfully-
(a) enters, records or stores, or causes to be entered, recorded or
stored, in any manner whatsoever any matter that he knows to be false or
misleading in a material particular;
(b) destroys, removes or falsifies, or causes to be destroyed, removed or
falsified, any matter that is entered, recorded or stored; or
(c) fails to enter, record or store any matter with intent to falsify the
records or any part of the records intended to be compiled from that
matter,
he shall be guilty of an offence and shall be liable on conviction upon
indictment to a fine of $500,000 and to imprisonment for 5 years. (Amended
35 of 1982 s. 4)
45A. Issue of contract notes
(1) A dealer shall, in respect of every contract for the purchase, sale or
exchange of a futures contract entered into by him in Hong Kong whether as
principal or agent, make out a contract note which complies with
subsection (2) not later than the end of the next trading day after the
date of execution, and-
(a) where the transaction was entered into as agent, deliver the contract
note to the client not later than 5 days after such date;
(b) where the transaction was entered into as principal, retain the
contract note for himself.
(2) A contract note made out by a dealer under subsection (1) shall
include where applicable-(Amended 61 of 1985 s. 12)
(a) the name of the client under subsection (1) (a) to whom the dealer is
required to give the contract note;
(b) the name or style under which the dealer carries on his business as a
dealer and the address of the principal place at which he so carries on
business;
(c) where the dealer is acting as principal, a statement that he is so
acting;
(d) the name of the commodity exchange on which the contract has
been executed;
(e) if the contract has been executed by an agent, the name of the agent;
(f) the date of execution of the contract and the date upon which the
contract note is made out;
(g) whether the contract is a new contract or a contract for settlement;
(h) whether the contract is by way of-
(i) purchase;
(ii) sale; or
(iii) exchange;
(i) the name of the commodity being bought, sold or exchanged;
(j) the trading unit of the commodity;
(k) except in the case of a contract by way of exchange, the price per
trading unit;
(l) the number of trading units;
(m) the date on which the futures contract is to be performed; (Replaced
61 of 1985 s. 12)
(n) the rate or amount of commission payable in respect of the contract.
(3) Any dealer who contravenes this section shall be guilty of an offence
and shall be liable on conviction to a fine of $10,000 and to imprisonment
for 6 months. (Added 54 of 1980 s. 3)
45B. Dealers to provide certain information, etc. to client
(1) Subject to subsection (2), every dealer shall, on being requested to
do so by a client-
(a) provide the client with a copy of any contract note relating to the
dealing, and a copy of the client's account with the dealer; and
(b) if the Commission on the application of the client so directs, make
available for inspection by the client, at all reasonable times during the
dealer's ordinary hours of business, the dealer's copy of the contract
note and the client's account with the dealer. (Amended 10 of 1989 s. 65)
(2) Subsection (1) does not require a dealer to-
(a) provide, or keep available for inspection, a copy of any contract note
which relates to a dealing transacted more than 2 years before the date of
the request; or
(b) provide a copy of, or keep available for inspection, any account which
relates to a dealing transacted more than 7 years before the date of the
request.
(3) Any dealer who contravenes this section shall be guilty of an offence
and shall be liable on conviction to a fine of $10,000 and to imprisonment
for 6 months. (Added 54 of 1980 s. 3)
46. Monies to be paid into segregated accounts
(1) A dealer shall establish and keep with an organization approved by the
Commission for the purposes of this subsection, a deposit-taking company
registered under the Banking Ordinance (Cap. 155), a restricted licence
bank or a licensed bank, one or more segregated accounts into which he
shall pay, within 4 bank trading days after their receipt, all amounts
(less brokerage and other proper charges relating to the requirements of a
clearing house or other clearing organization) which are received from, or
for the account of, any client in respect of the purchase or sale of
futures contracts, except those amounts paid to that client, or in
accordance with his directions, not being directions for the payment into
an account of the dealer which is not a segregated account. (Amended 3 of
1990 s. 55)
(2) All amounts required to be paid into a segregated account under
subsection (1) shall be retained there by the dealer until they are paid
to the client on whose behalf they are being held or in accordance with
his directions or. as the case may be, until they are required to complete
payment in respect of the purchase of futures contracts on behalf of such
client.
(3) All amounts required to be paid into a segregated account under
subsection (1) shall be so paid within 4 bank trading days after they are
received by the dealer.
(4) No amount other than an amount referred to in subsection (1) shall be
paid into a segregated account.
(5) Every dealer shall keep records of-
(a) all amounts paid into a segregated account kept by him, specifying the
clients on whose behalf the amounts are held and the dates on which they
were paid into the account;
(b) all withdrawals from the segregated account, the dates of such
withdrawals, and the names of the clients on whose behalf the withdrawals
are made; and
(c) such other particulars (if any) as the Commission may require.
(6) Any dealer who-
(a) without reasonable excuse, contravenes this section shall be guilty of
an offence and shall be liable on conviction upon indictment to a fine of
$10,000 and to imprisonment for 6 months;
(b) with intent to defraud, contravenes this section shall be guilty of an
offence and shall be liable on conviction upon indictment to a fine
$500,000 and to imprisonment for 5 years. (Amended 35 of 1982 s. 5)
(Amended 10 of 1989 s. 65)
47. Monies in segregated account not available for payment of debts, etc.
(1) Except as otherwise provided in this Part, money held in a segregated
account shall not be available for payment of the debts of a dealer or be
liable to be paid or taken in execution under the order or process of any
court.
(2) Any payment made in contravention of subsection (1) shall be void ab
initio, and no person to whom the money is paid shall obtain any title to
it.
48. Claims and liens on segregated accounts not affected
Nothing in this Part shall be construed as taking away or affecting any
lawful claim or lien which any person has in respect of any money held in
a segregated account or in respect of any money received for the purchase
of futures contracts or from the sale of futures contracts before the
money is paid into a segregated account.
49. Dealers to appoint auditors
(1) A dealer shall appoint an auditor to audit his accounts (including all
segregated accounts required to be kept by the dealer under section 46).
and, where for any reason the auditor ceases to act for the dealer, the
dealer shall, as soon as practicable thereafter, appoint another auditor
to replace him.
(2) An auditor is not eligible for appointment under subsection (1) if-
(a) where the dealer is an individual, he is an employee of the dealer or
is in the employment of any employee of the dealer;
(b) where the dealer is a corporation, he is a director or employee of the
corporation or is in the employment of any director or employee of the
corporation; or
(c) where the dealer is a firm, he is a partner or employee of the firm or
is in the employment of any partner or employee of the firm.
49A. Notification of change of auditors
(1) A dealer shall immediately give written notice to the Commission if-
(a) where the dealer is a corporation, it-
(i) proposes to give notice to its shareholders of an ordinary resolution
removing an auditor appointed under section 49 before the expiration of
his term of office; or
(ii) gives notice to its shareholders of an ordinary resolution replacing
an auditor appointed under section 49 at the expiration of his term of
office with another auditor; and
(b) whether or not the dealer is a corporation, a person appointed under
section 49 to be the auditor of the dealer ceases to be such auditor
otherwise than in consequence of a resolution referred to in paragraph
(a).
(2) A dealer who contravenes subsection (1) commits an offence and is
liable on conviction to a fine of $5,000.
(Added 25 of 1992 s. 3)
50. Dealers to lodge annual accounts, etc.
(1) A dealer shall-
(a) in respect of the financial year beginning before and ending after the
day on which this section comes into operation, or the day on which the
dealer commences to carry on business as a dealer, whichever is the later
day; and
(b) in respect of each subsequent financial year,
prepare a true and fair profit and loss account and a balance sheet made
up to the last day of the financial year and lodge the account and balance
sheet with the Commission within 4 months (or such extension thereof
permitted by the Commission under subsection (2) next following the end of
the financial year, together with an auditor's report on the account and
balance sheet.
(2) Where an application for the extension of the period of 4 months
specified in subsection (1) is made by a dealer to the Commission and the
Commission is satisfied that there are special reasons for requiring the
extension, the Commission may extend that period by such period as the
Commission thinks fit subject to such conditions (if any) as the
Commission thinks fit to impose. (Amended 63 of 1990 s. 4)
(3) Any dealer who fails to comply with subsection (1) or with any
condition imposed under subsection (2) shall be guilty of an offence and
shall be liable on conviction to a fine of $ 5,000.
(Amended 10 of 1989 s. 65)
51. Reports by auditor to the Commission in certain cases
(1) If, during the performance of his duties as auditor for a dealer, an
auditor-
(a) becomes aware of any matter which in his opinion adversely affects the
financial position of the dealer to a material extent; or
(b) discovers evidence of a contravention by the dealer of section 45 or
46, he shall, as soon as practicable thereafter, send to the Commission
and to the dealer a report in writing of the matter or, as the case may
be, the contravention, (Amended 10 of 1989 s. 65, 25 of 1992 s. 4)
(2) An auditor of a dealer appointed under section 49 shall immediately
give written notice to the Commission if he-
(a) resigns before the expiration of his term of office;
(b) decides not to seek re-appointment; or
(c) decides to include any qualification or adverse statement in his
report on the dealer's accounts. (Added 25 of 1992 s. 4)
51A. Communication by auditor with Commission
(1) No duty which an auditor of a dealer may be subject to shall be
regarded as contravened by reason of his communicating in good faith to
the Commission, whether or not in response to a request made by the
Commission, any information or opinion on a matter of which he becomes
aware in his capacity as auditor and which is relevant to any function of
the Commission under this Ordinance or the Securities and Futures
Commission Ordinance (Cap. 24).
(2) Subsection (1) applies to an auditor of a former dealer and a former
auditor as it applies to an auditor of a dealer.
(3) In this section-
"former auditor" means a person who was formerly the auditor of a dealer
or former dealer;
"former dealer" means a person who was formerly a dealer.
(Added 25 of 1992 s. 5)
52. Power of Commission to appoint auditor
(1) Where-
(a) a dealer fails to lodge an auditor's report under section 50; or
(b) the Commission receives a report under section 51,
the Commission may, if it is satisfied that it is in the interests of the
dealer, dealer's clients, or general public, to do so, appoint in writing
an auditor to examine and audit, either generally or in relation to any
particular matter, the books, accounts and records of the dealer.
(2) Where the Commission is of the opinion that the whole or any part of
the costs and expenses of an auditor appointed by it under subsection (1)
should be borne by the dealer, the Commission may, by order in writing,
direct the dealer to pay a specified amount, being the whole or part of
such costs and expenses, within the time and in the manner specified.
(3) Where a dealer fails to comply with an order under subsection (2), the
amount specified in the order may be sued for and recovered by the
Commission as a debt in a court.
(Amended 10 of 1989 s. 65)
53. Power of Commission to appoint an auditor on application of client (1)
On receipt of an application in writing from a client who alleges that a
dealer has failed to account to him in respect of any money held or
received, or any futures contract bought or sold, by the dealer for him or
on his behalf, the Commission may, after first giving the dealer an
opportunity to give an explanation of the failure, appoint in writing an
auditor to examine and audit, either generally or in relation to any
particular matter, the books, accounts and records of that dealer.
(2) Every application under subsection (1) shall state-
(a) the particulars of the circumstances in respect of which the dealer is
alleged to have failed to account;
(b) the particulars of the moneys and the dealings in futures contracts in
respect of which the failure has occurred; and
(c) such other particulars as the Commission may require.
(3) The statements in an application under subsection (1) shall be
verified by a statutory declaration made by the applicant and shall, if
made in good faith and without malice, be privileged.
(4) The Commission shall not appoint an auditor under subsection (1)
unless it is satisfied that-
(a) the applicant has a good reason for making the application; and
(b) it is in the interests of the dealer, applicant or general public that
the books, accounts and records of the dealer should be examined, audited
and reported on.
(5) Where the Commission is of the opinion that the whole or any part of
the costs and expenses of an auditor appointed by it under subsection (1)
should be borne by the dealer or applicant, the Commission may, by order
in writing direct the dealer or applicant to pay a specified amount, being
the whole or part of such costs and expenses, within the time and in the
manner specified.
(6) Where a dealer or applicant fails to comply with an order under
subsection (5), the amount specified in the order may be sued for and
recovered by the Commission as a debt in a court.
(Amended 10 of 1989 s. 65)
54. Auditor to report to the Commission
An auditor appointed under section 52 or 53 shall, on the conclusion of
the examination and audit in respect of which he was appointed, make a
report thereon to the Commission. (Amended 10 of 1989 s. 65)
55. Powers of auditors appointed by the Commission
(1) An auditor appointed under section 52 or 53 to examine and audit the
books. accounts and records of a dealer may for the purpose of carrying
out the examination and audit-
(a) examine on oath the dealer and, where the dealer is a corporation or
firm, any director of the corporation or partner of the firm, as the case
may be, and any of the dealer's employees and agents and any other auditor
appointed under this Ordinance in relation to those books. accounts and
records;
(b) require the dealer and, where the dealer is a corporation or firm, any
director of the corporation or partner of the firm, as the case may be,
and the dealer's employees and agents, to produce any books, accounts and
records held by or on behalf of the dealer relating to his business;
(c) require an auditor appointed by the dealer to produce any books.
accounts and records held by him relating to the business of the dealer;
(d) require a clearing house to produce any books, accounts and records
kept by it relating to the business of the dealer; (Amended 61 of 1985 s.
13)
(e) require a clearing house to provide any information in its possession
relating to the business of the dealer; (Amended 61 of 1985 s. 13)
(f) employ such persons as he considers necessary to assist him to carry
out the examination and audit; and
(g) by instrument in writing under his hand, authorize any person employed
by him to do, in relation to the examination and audit, any act or thing
that he could do himself as an auditor, except the examination of any
person on oath, under this subsection.
(2) Any person who, without reasonable excuse, refuses or fails to answer
any question put to him, or fails to comply with any request made to him,
by an auditor appointed under section 52 or 53 or person authorized under
subsection (1) (g)
shall be guilty of an offence and shall be liable on conviction to a fine
of $10,000 and to imprisonment for 2 years.
(3) If a clearing house, without reasonable excuse, fails to comply with
any request made to it by an auditor appointed under section 52 or 53 or
person authorized under subsection (1) (g), a clearing house shall be
guilty of an offence and shall be liable on conviction to a fine of
$50,000. (Amended 61 of 1985 s. 13)
56. Offence to destroy, alter, etc. records
(1) Any person who, with intent to prevent, delay or obstruct the carrying
out of any examination and audit under this Part-
(a) destroys, conceals or alters any book, account or record relating to
the business of a dealer; or
(b) sends or conspires with any other person to send, out of Hong Kong any
such book, account or record, or any property of any description belonging
to or in the possession or under the control of a dealer,
shall be guilty of an offence and shall be liable on conviction upon
indictment to a fine of $500,000 and to imprisonment for 5 years.
(2) If, in a prosecution for an offence under subsection (1), it is proved
that the person charged-
(a) destroyed, concealed or altered any book, account or record mentioned
in paragraph (a) of that subsection; or
(b) sent or conspired to send out of Hong Kong any such book, account or
record, or any property mentioned in paragraph (b) of that subsection,
the onus of proving that in so doing he did not act with intent to
prevent, delay or obstruct the carrying out of an examination and audit
under this Part shall lie on him.
(3) Any person who, with intent to prevent, delay or obstruct the carrying
out of an examination and audit under this Part leaves Hong Kong shall be
guilty of an offence and shall be liable on conviction upon indictment to
a fine of $500,000 and to imprisonment for 5 years.
(Amended 35 of 1982 s. 6)
57. Restriction on auditor's and employee's right to communicate certain
matters Except as may be necessary for the carrying into effect of the
provisions of this Ordinance or so far as may be required for the purposes
of any legal proceedings, whether civil or criminal, an auditor appointed
under section 52 or 53 or any employee of such auditor shall not divulge
any information which may come to his knowledge in the course of
performing his duties as such auditor or employee, as the case may be, to
any person other than-
(a) the Commission; and (Amended 10 of 1989 s. 65)
(b) - (c) (Repealed 10 of 1989 s. 65)
(d) in the case of an employee, the auditor by whom he is employed.
58. Exchange Company may impose additional obligations on members
Nothing in this Part shall prevent the Exchange Company or Commission from
imposing on dealers any further obligations or requirements which either
of them thinks necessary with respect to- (Amended 10 of 1989 s. 65)
(a) the audit of accounts;
(b) the information to be given in reports by auditors; or
(c) the keeping of accounts, books and records.
PART VI TRADING PRACTICES
59. Fixing of trading and position limits
(1) The Commission may, by rule, establish and fix limits on the amount of
trading which may be done, or positions which may be held, by any person
under futures contracts in respect of a specified commodity on, or subject
to the rules of, the relevant commodity market.
(2) Nothing in subsection (1) shall be construed as prohibiting the
Commission from fixing different trading or position limits for different
specified commodities, commodity markets or delivery months or from
exempting certain transactions specified in the rule.
60. Offence to exceed limits
Where under section 59 the Commission has established any limits, no
person shall-
(a) directly or indirectly, enter into a futures contract in respect of
such specified commodity on, or subject to the rules of, the commodity
market to which the rule applies, for any amount of such specified
commodity during any one business day in excess of any trading limit fixed
for one business day or other stated period by the Commission;
or
(b) directly or indirectly hold or control a net long or net short
position in such specified commodity under a futures contract on, or
subject to the rules of, the relevant commodity market in excess of any
position limit fixed by the Commission for or with respect to such
specified commodity.
(Amended 61 of 1985 s. 14)
60A. Hawking of futures contracts
(1) Subject to subsections (2) and (3), a person shall not, whether on his
own behalf or otherwise and whether by appointment or otherwise, call from
place to place-
(a) making or offering to make with any person-
(i) an agreement for or with a view to having that other person purchase
or sell a futures contract; or
(ii) an agreement the purpose or pretended purpose of which is to secure a
profit to that other person from a futures contract; or
(b) inducing or attempting to induce any other person to enter into any
agreement referred to in paragraph (a),
whether or not in calling from place to place he does any other act or
thing.
(2) Subsection (1) does not apply to-
(a) a person in so far as-
(i) he calls at the place of another person who is a banker, solicitor,
professional accountant, dealer, commodity trading adviser, dealer's
representative or commodity trading adviser's representative; and
(ii) whether as principal or agent, he makes, or offers to make, with that
other person an agreement referred to in subsection (1) or induces, or
attempts to induce, that other person to enter into such an agreement; or
(b) any other person calling from place to place who belongs to a class of
persons prescribed in regulations for the purpose of this subsection.
(3) Nothing in this section applies to any futures contract exempted by
the Commission for the purposes of this section if any conditions subject
to which the exemption is granted have been fulfilled.
(4) Any person who contravenes this section shall be guilty of an offence
and shall be liable on conviction to a fine of $10,000 and to imprisonment
for 6 months.
(5) If in any proceedings under subsection (4) for a contravention of this
section it is proved that the accused did any of the acts mentioned in
subsection (1) on 2 or more occasions within any period of 14 days, he
shall, until the contrary is proved, be presumed to have been calling from
place to place.
(6) In this section-
"call" includes a visit in person and a communication by telephone;
"futures contract" includes a futures contract (or a contract represented
as being a futures contract) in respect of an item, whether or not capable
of being delivered, which is prescribed by the Commission for the purposes
of this definition. (Replaced 61 of 1985 s. 15)
(Added 54 of 1980 s. 4)
61. Dealing in options prohibited
No person shall transact on or through any commodity market, or hold
himself out as being prepared to transact on or through any commodity
market, any dealing which confers on any person an option to purchase or
sell any commodity or on a futures contract, except as provided in the
rules of the commodity market.
(Amended 61 of 1985 s. 16)
62. False trading, etc.
(1) No person shall intentionally create or cause to be created, or do
anything with the intention of creating a false or misleading appearance
of active trading in any commodity on any commodity market.
(2) No person shall circulate or disseminate, or authorize or be concerned
in the circulation or dissemination of, any statement or information to
the effect that the price of any futures contract will or is likely to
rise or fall because of the market operations of one or more persons
which, to his knowledge, are conducted in contravention of subsection (1).
63. Employment of fraudulent or deceptive devices, etc.
No person shall, directly or indirectly, in connection with any
transaction with any other person involving the purchase or sale of a
futures contract-
(a) employ any device, scheme or artifice to defraud that other person; or
(b) engage in any act, practice or course of business which operates as a
fraud or deception, or is likely to operate as a fraud or deception, of
that other person.
64. False or misleading statements
No person shall, directly or indirectly, for the purposes of inducing the
purchase or sale of a futures contract, make-
(a) any statement which is, at the time and in the light of the
circumstances in which it is made, false or misleading with respect to any
material fact and which he knows or has reasonable grounds for believing
is false or misleading; or
(b) any statement which is, by reason of the omission of a material fact,
rendered false or misleading and which he knows or has reasonable grounds
for believing is rendered false or misleading by reason of the omission of
that fact.
65. Offences
(1) Any person who contravenes section 60 or 61 shall be guilty of an
offence and shall be liable on conviction upon indictment to a fine of
$10,000 and to imprisonment for 6 months.
(2) Any person who contravenes section 62, 63 or 64 shall be guilty of an
offence and shall be liable on conviction upon indictment to a fine of
$1,000,000 and to imprisonment for 7 years. (Amended 35 of 1982 s. 7)
PART VII 66-75. (Repealed 10 of 1989 s. 65)
PART VIII COMPENSATION FUND
76. Interpretation
(1) In this Part, unless the context otherwise requires-
"Committee" means the Futures Compensation Fund Committee established
under section 78 (1). (Amended 10 of 1989 s. 65)
(2) A reference in this Part to a claimant or person making a claim
includes, in the event of his death, insolvency or other disability, a
reference to his personal representative or any other person having
authority to administer his estate.
77. Establishment of compensation fund The Commission shall establish and
maintain a compensation fund, to be known as the compensation fund, for
the purposes set out in this Part.
78. Futures Compensation Fund Committee
(1) There shall be a committee, to be known as the Futures Compensation
Fund Committee, which shall be responsible, subject to this section, for
the administration of the compensation fund.
(2) The Committee shall consist of 5 members who shall be appointed by the
Commission and of whom at least 2 shall be directors of the Commission and
at least 2 others shall be individuals nominated by the Exchange Company.
(Amended 61 of 1985 s. 28)
(3) The Commission shall nominate one of the members of the Committee, who
is also a director of the Commission, to be the chairman of the Committee.
(4) The Committee shall exercise on behalf of the Commission such of the
powers, duties and functions of the Commission under this Part as may be
delegated to the Committee by the Commission.
(5) Subject to any direction of the Commission, the Committee may regulate
its procedure in such manner as it thinks fit.
(Amended 10 of 1989 s. 65)
79. Money constituting the compensation fund
(1) The compensation fund shall consist of-
(a) all amounts paid to or deposited with the Commission by the Exchange
Company in accordance with the provisions of this Part;
(b) all amounts recovered by or on behalf of the Commission by the
exercise of any right of action conferred by this Part;
(c) all amounts borrowed under subsection (2);
(ca) any return or profit received on an investment made under section 83
(1) and not paid to the Exchange Company under section 83 (2) (b); (Added
61 of 1985 s. 29)
(cb) moneys paid by the Exchange Company to the Commission in respect of
the contract levy; (Added 61 of 1985 s. 29)
(d) all other amounts lawfully paid into the compensation fund.
(2) Subject to the approval of the Committee in respect of the rate of
interest payable on any particular loan, the Commission may for the
purposes of the compensation fund borrow from any licensed bank or
restricted licence bank and may charge any investments acquired under
section 83 by way of security for any such loan; but the aggregate sum
owing at any one time in respect of such loans shall not exceed
$2,000,000. (Amended 3 of 1990 s. 55)
(Amended 61 of 1985 s. 29)
79A. Contract levy
(1) The Exchange Company shall, in respect of each shareholder, pay to the
Commission for purposes of the compensation fund a levy at the prescribed
rate on every leviable transaction.
(2) The Commission may, after consultation with the Exchange Company,
make rules prescribing in respect of the contract levy-
(a) the rate at which it is to be paid by the Exchange Company, which may
be expressed as a fiat rate for each leviable transaction or as a
percentage of the value of each leviable transaction and which may be a
nil rate;
(b) the form and timing of returns to be made by the Exchange Company to
the Commission in respect of particulars of leviable transactions;
(c) the furnishing by the Exchange Company to the Commission of audited
accounts in support of such returns;
(d) the making of assessments by the Commission in default of returns by
the Exchange Company;
(e) the manner and timing of payments by the Exchange Company to the
Commission in respect of the contract levy;
(f) any other matter relating to the obligations of the Exchange Company
in respect of the contract levy which may conveniently be prescribed by
such rules.
(3) Rules made under subsection (2) shall be published in the Gazette and
shall come into operation not earlier than 1 month after such publication.
(4) For the purposes of this section and of any rules made under its
"leviable transaction" means a contract to buy or a contract to sell which
is-
(a) traded on the Commodity Exchange by a shareholder in the course of
trading in commodity futures contracts; and
(b) registered with a clearing house.
(Added 61 of 1985 s. 30)
80. Money to be kept in bank account
The Commission shall open at one or more licensed banks or with one or
more restricted licence banks, one or more bank accounts and shall,
pending their application in accordance with this Part, pay into or
transfer to such bank account or accounts all amounts forming part of the
compensation fund.
(Amended 61 of 1985 s. 31; 3 of 1990 s. 55)
81. Accounts of compensation fund
(1) The Commission shall keep proper accounts of the compensation fund,
and shall in respect of the financial year beginning before and ending
after the day on which this Ordinance comes into operation, and in respect
of each subsequent financial year, prepare a revenue and expenditure
account and a balance sheet made up to the last day of the financial year.
(2) The Commission shall appoint an auditor to audit the compensation
fund.
(3) The auditor so appointed shall annually audit the accounts of the
compensation fund and shall audit, and prepare an auditor's report in
respect of, each revenue and expenditure account and balance sheet
prepared under subsection (1) and shall submit the report to the
Commission.
(3A) The auditor appointed under this section may call for and inspect
such books and records of the Exchange Company as he may require in order
to perform his functions under this section. (Added 61 of 1985 s. 32)
(4) Not later than 4 months after the end of each financial year the
Commission shall cause a copy of the audited revenue and expenditure
account and balance sheet to be sent to the Exchange Company together with
the auditor's report on such account and balance sheet and shall cause the
account and balance sheet to be published in the Gazette. (Amended 61 of
1985 s. 32)
82. Exchange Company to make deposits in respect of shareholders
(1) The Exchange Company shall deposit and keep deposited with the
Commission in respect of each shareholder-
(a) an amount of $50,000 in cash; and (Amended 61 of 1985 s. 33)
(b) a written undertaking to deposit with the Commission such further
amount or amounts up to a total of $50,000 as the Commission may from time
to time require the Exchange Company to deposit under section 85 (1).
(Replaced 61 of 1985 s. 33)
(2) Any amount due from the Exchange Company under this section may be
sued for and recovered by the Commission as a debt in a court.
83. Investment of money in compensation fund
(1) The Commission may invest any money which forms part of the
compensation fund and is not immediately required for any other purposes
provided for by this Part-
(a) on fixed deposit with a licensed bank or restricted licence bank; or
(Amended 3 of 1990 s. 55)
(b) in securities in which trustees are authorized by law to invest trust
funds.
(2) Any return or profit on an investment of moneys by the Commission
under subsection (1) shall, at the discretion of the Commission and after
deduction of such sum representing the expenses of its management of the
compensation fund as the Commission thinks fit, be either-
(a) added to the fund; or
(b) paid to the Exchange Company. (Replaced 61 of 1985 s. 34)
(3) A fixed deposit receipt or other document evidencing the investment of
money under subsection (1) may be kept in the office of the Commission or
deposited for safe keeping with a licensed bank or restricted licence
bank. (Amended 10 of 1989 s. 65; 3 of 1990 s. 55)
(Amended 61 of 1985 s. 34)
84. Effect of persons ceasing to be shareholders
(1) Subject to subsection (2), where the Exchange Company has made a
deposit under section 82 or section 85 in respect of a shareholder and the
shareholder ceases to be a shareholder, the Commission shall, within 6
months after the date on which the shareholder ceased to be a shareholder.
refund to the Exchange Company the deposit so made or such part thereof as
the Commission may determine after taking into account all ascertained and
contingent liabilities of the compensation fund, and any undertaking given
under section 82 (1) (b) in respect of that shareholder shall be treated
as discharged.
(2) Where a person ceases to be a shareholder consequent on a default by
him which results in a payment out of the compensation fund, the amount of
such payment shall be set against the amount of the deposit which would
otherwise be refunded to the Exchange Company under subsection (1)
(3) Where a person who has ceased to be a shareholder again becomes a
shareholder, sections 82, 85 and 87 (3) shall apply in respect of him as
if he were a new shareholder.
(Replaced 61 of 1985 s. 35)
85. Replenishment of compensation fund in certain cases
(1) If required to do so by the Commission, the Exchange Company shall, in
addition to making the deposit under section 82 (1) (a) in respect of each
shareholder, from time to time deposit with the Commission a further
amount or amounts up to a total of $50,000 in respect of each person who
is a shareholder at the time of such requirement and upon any such payment
being made, the undertaking given under section 82 (1) (b) in respect of
each such shareholder shall be treated as varied or discharged
accordingly. (Replaced 61 of 1985 s. 36)
(2) The maximum liability of the Exchange Company to the compensation fund
shall not in any event exceed $100,000 in respect of each shareholder.
(Amended 61 of 1985 s. 36)
(3) (Repealed 61 of 1985 s. 36)
(4) Any amount due from the Exchange Company under this section may be
sued for and recovered by the Commission as a debt in a court.
86. Payment out of the compensation fund
Subject to this Part, there shall be paid out of the compensation fund as
required and in such order as the Commission may determine one or more of
the following amounts-(Amended 10 of 1989 s. 65)
(a) all legal and other expenses incurred in investigation or defending cl
made under this Part or incurred in relation to the compensation
fund or in the exercise by the Exchange Company or the Commission of the
rights, powers and authority vested in it by this Part in relation to the
compensation fund;
(b) the expenses incurred in the administration of the compensation fund
which are not recovered pursuant to section 83 (2);
(ba) any return or profit paid to the Exchange Company under section 83
(2) (b); (Added 61 of 1985 s. 37)
(bb) interest on any sum borrowed under section 79 (2); (Added 61 of 1985
s. 37) (c) the amounts of all claims, including costs, allowed by the Exch
Company or established against the Exchange Company under this
Part; and
(d) all other amounts payable out of the compensation fund in accordance
with this Part. (Amended 61 of 1985 s. 37)
87. Claims against the compensation fund
(1) Subject to subsection (6), where a person whether in Hong Kong or
elsewhere sustains pecuniary loss because of a default committed in the
course of or in connection with the commodity futures trading business on
the Commodity Exchange of a shareholder by the shareholder or by any
director, partner or employee, as the case may be, of the shareholder in
respect of any money, futures contract or other property-
(a) which was entrusted to or received by the shareholder or any director,
partner or employee of the shareholder, for or on behalf of that person;
and
(b) to which that person is entitled or in which he has a beneficial
interest (whether existing or contingent),
he shall be entitled, subject to this Part, to claim compensation from the
compensation fund for such pecuniary loss. (Amended 61 of 1985 s. 38)
(2) Subsection (1) does not entitle any shareholder to make a claim
against the compensation fund.
(3) Subject to this section and to section 90 (6), the total amount of
compensation that may be paid out of the compensation fund in respect of
any shareholder consequent on a default by that shareholder shall not
exceed $2,000,000 which shall cover-
(a) all claims arising out of that default; and
(b) all claims arising out of any earlier default by that shareholder
which have not been the subject of a determination under section 90.
(Replaced 61 of 1985 s. 38)
(4) Subject to subsection (3), the amount of compensation which any person
is entitled to claim from the compensation fund is the amount of the
actual pecuniary loss suffered by him (including the reasonable costs of
and disbursements incidental to the making and proving of his claim) less
any amount or value of money or other benefits received or receivable by
him in reduction of the loss from any source other than the compensation
fund. (Amended 61 of 1985 s. 38)
(4A) For the avoidance of doubt it is hereby declared that it shall not be
a ground for refusing payment of compensation to a person under this Part
that the person has not exhausted all relevant rights of action and other
legal remedies against the shareholder in relation to whom the claim
arose. (Added 61 of 1985 s. 38)
(5) Where compensation is paid out of the compensation fund under this
Part, interest at such rate and in respect of such period as the
Commission may determine shall be payable to the claimant on the total
amount of compensation so paid, but excluding the costs and disbursements
referred to in subsection (4). (Replaced 61 of 1985 s. 38)
(6) Subsection (1) shall not apply where the default occurs prior to the
commencement of this section.
88. Rights of innocent directors, etc. in relation to the compensation
fund
(1) Notwithstanding anything to the contrary in this Part, where all
persons submitting claims for compensation under this Part have been fully
compensated in accordance with the provisions of this Part for the
pecuniary loss sustained by them as a result of the default by a director,
partner or employee of a shareholder, the shareholder or any other
director, partner or employee of the shareholder, who has paid the
compensation to any claimant shall be subrogated to the extent of that
payment to all the rights and remedies of that claimant against the
compensation fund if the Exchange Company considers, having regard to all
the circumstances, that he-
(a) was in no way a party to the default in question; and
(b) acted honestly and reasonably in the matter.
(2) The Exchange Company shall notify in writing the shareholder or
director, partner or employee of the shareholder referred to in subsection
(1) the decision made by it under that subsection.
(3) If a shareholder or any director, partner or employee of a shareholder
is aggrieved by the decision of the Exchange Company under subsection (1),
he may, within 28 days after receipt of notice of the decision, appeal to
the Commission against the decision.
(4) An appellant shall, on the same day as lodging a notice of appeal with
the Commission, lodge a copy of the notice with the Exchange Company.
(5) The Commission shall inquire into and decide on the appeal and, if the
Commission considers that having regard to all the circumstances, the
appellant-
(a) was in no way a party to the default in question; and
(b) acted honestly and reasonably in the matter,
it may direct that the appellant shall be subrogated to the extent of any
payment made by him to all the rights and remedies against the
compensation fund of the person to whom he has paid the compensation.
89. Notice calling for claims against the compensation fund
(1) Where the Exchange Company has reason to believe that a shareholder
has committed a default which might give rise to a claim for compensation
under this Part, the Exchange Company shall cause to be published in 1 or
more English language newspapers and 1 or more Chinese language
newspapers, published daily and circulating generally in Hong Kong, a
notice specifying a date, not being earlier than 3 months after
publication of the notice, on or before which claims for compensation from
the compensation fund may be made in relation to the shareholder specified
in the notice. (Amended 61 of 1985 s. 39)
(2) Where any person wishes to claim compensation under this Part, he
shall lodge a claim in writing either with the Exchange Company or with
the Commission-(Amended 61 of 1985 s. 39)
(a) if a notice under subsection (1) has been published, on or before the
date specified in the notice; or
(b) if no such notice has been published, within 3 months after the
claimant became aware of the default giving rise to the claim.
(3) Any claim which is not lodged within the time limited by subsection
(2) shall, unless the Exchange Company otherwise determines, be barred.
(4) An action for damages shall not lie against the Exchange Company or
against any member of the management committee by reason of any notice
published for the purposes of this section in good faith and without
malice.
90. Power of the Exchange Company in respect of claims
(1) Where the Exchange Company is satisfied that a claim for compensation
under this Part is a proper claim, it shall, subject to this Part, make a
determination allowing the claim.
(2) If the Exchange Company is not satisfied as to the propriety of a
claim for compensation under this Part, it shall make a determination
disallowing the claim or, if it is satisfied as to the propriety of a part
of such a claim, it shall make a determination allowing the claim as to
that part.
(2A) A determination under subsection (1) or (2) shall be made by the
Exchange Company within 6 months of the date on which the claim was lodged
with the Exchange Company or the Commission or within such longer period
as the Commissioner may authorize in any particular case. (Added 61 of
1985 s. 40)
(3) Where the Exchange Company makes a determination under subsection (1)
or (2), it shall forthwith serve notice in writing of its determination on
the claimant or on his solicitor and deliver a copy of the notice to the
Commission.
(4) If the Exchange Company disallows, or allows partially, a claim under
subsection (2), the determination of the Exchange Company shall specify
the reasons for the disallowance or partial allowance, as the case may be.
(5) If, in the case of any particular claim, after taking into account all
ascertained and contingent liabilities of the compensation fund, the
Exchange Company considers that the assets of the fund so permit, it may,
with the prior approval of the Commission, allow in respect of the claim
such sum in excess of the amount specified in section 87 (3) as the
Exchange Company thinks fit. (Replaced 61 of 1985 s. 40)
(6) Without prejudice to section 92, a person aggrieved by a determination
of the Exchange Company under this section or section 91 (2) may, within 1
month after the determination, appeal to an Appeals Committee in
accordance with any rules made under section 74 and the provisions of Part
VII, except sections 67 and 69, shall apply to any such appeal. (Added 61
of 1985 s. 40)
(7) The receipt of a copy-
(a) of a notice under subsection (3) notifying the allowance or partial
allowance of a claim; or
(b) of a decision allowing an appeal under subsection (6) and conforming
with section 75 (1),
shall be sufficient authority for the Commission to pay the claimant the
amount allowed by the Exchange Company or on appeal, as the case may be,
but before making a payment the Commission may require the Exchange
Company to provide such further particulars of the claim, the claimant and
the determination or appeal as the Commission thinks fit. (Added 61 of
1985 s. 40. Amended L. N. 313 of 1985)
91. Exchange Company may require production of documents, etc.
(1) The Exchange Company may require any person to produce any futures
contracts, documents or statements of evidence necessary-
(a) in order to substantiate any claim for compensation under this Part;
(b) for the purpose of exercising its rights against any shareholder or
against any other person; or
(c) for the purpose of enabling criminal proceedings to be brought against
any person in respect of a default, being a default which is or involves
the commission of a criminal offence.
(2) Where any claimant required to produce any futures contracts,
documents or statements of evidence under subsection (1) fails to produce
them within 1 month or such longer period as the Exchange Company may
allow in any particular case, the Exchange Company may, if it is satisfied
that the futures contracts, documents or statements of evidence are in the
possession of, or available to, the claimant, disallow the claimant's
claim. (Amended 61 of 1985 s. 41)
92. Court proceedings to establish a claim against the compensation fund
(1) Subject to subsection (2), a person whose claim for compensation under
this Part has been disallowed or partially allowed by the Exchange Company
or on appeal under section 90 may commence proceedings in a court against
the Exchange Company to establish his claim. (Amended 61 of 1985 s. 42)
(2) Except with the leave of the court, no proceedings against the
Exchange Company under subsection (1) may be commenced after the
expiration of 1 month after the service of the notice under section 90 (3)
or of the result of any appeal. (Amended 61 of 1985 s. 42)
(3) Proceedings brought against the Exchange Company to establish a claim
for compensation under this Part shall be by action as for a debt due from
the Exchange Company.
93. Supplementary provisions relating to court proceedings
In any proceedings brought under section 92-
(a) all defences that are available to the person or persons in relation
to whom the claim arose shall be available to the Exchange Company;
(b) all questions as to costs shall be in the discretion of the court; and
(c) evidence which is admissible against the shareholder or against any
other person by whom it is alleged a default was committed is admissible
to prove the commission of the default, notwithstanding that the
shareholder or other person is not the defendant in or a party to those
proceedings.
94. Court order establishing the claim
Where, in any proceedings brought under section 92, a court is satisfied
that the default on which the claim is founded was actually committed and
that the claimant otherwise has a valid claim, the court shall by order-
(a) allow the amount of the claim or such part of the claim as it thinks
proper;
(b) declare the fact and date of the default and the amount allowed under
paragraph (a); and
(c) direct the Commission to pay to the claimant the amount declared under
paragraph (b).
95. Subrogation of the Commission to rights, etc. of claimant on payment
from the compensation fund
On the Commission making any payment out of the compensation fund in
respect of any claim for compensation under this Part-
(a) the Commission shall be subrogated to the extent of that payment to
all the rights and remedies of the claimant in respect of the pecuniary
loss sustained by him by reason of the default on which the claim was
based together with such interest on that sum as may have been paid by the
Commission under section 87 (5); and
(b) the claimant shall have no right under any bankruptcy or legal
proceedings or otherwise to receive in respect of the pecuniary loss any
sum out of the assets of the shareholder concerned, or where the pecuniary
loss was caused by the default of a director, partner or employee of a
shareholder, the assets of that director, partner or employee, until the
Commission has been reimbursed the full amount of the payment made by it
out of the compensation fund, including any interest paid under section 87
(5). (Amended 61 of 1985 s. 43)
96. Payment of claims from the compensation fund only
No money or other property belonging to the Commission or the Exchange
Company, other than the compensation fund, shall be available for the
payment of any claim for compensation under this Part, whether the claim
is allowed by the Exchange Company or is made the subject of a court order
or otherwise.
97. Provision where the compensation fund is insufficient to meet claims
(1) Where the amount at credit in the compensation fund is insufficient to
enable the payment of the whole amount of all claims against it which have
been allowed, or in respect of which court orders have been made, under
this Part then the amount at credit shall, subject to subsection (2), be
apportioned between the claimants in such manner as the Exchange Company
or, as the case may be, the court thinks equitable; and any such claim
shall, so far as it remains unpaid, be charged against further receipts
of the compensation fund and paid out of the compensation fund when there
is again money available in the compensation fund.
(2) Where the aggregate of all claims for compensation which have been
allowed, or in respect of which court orders have been made, under this
Part in respect of the default giving rise to the claims exceeds the total
amount which may be paid under this Part in respect of any shareholder
concerned in the default, that total amount shall be apportioned between
the claimants in such manner as the Exchange Company or, as the case may
be, the court thinks equitable; and, on payment out of the compensation
fund of that total amount in accordance with that apportionment-
(a) all such claims and any order of the court relating to them; and
(b) all other claims for compensation which may subsequently arise or be
made in connection with the default, shall be absolutely discharged.
98. Power of Commission to return deposits on winding up of the Exchange
Company
In the event of the Exchange Company being wound up under the Companies
Ordinance (Cap. 32), the Commission may, in its absolute discretion,
after the satisfaction of all outstanding liabilities against the
compensation fund, pay to the liquidator of the Exchange Company the whole
or any part of the amounts deposited in cash by the Exchange Company under
this Part, together with any income accrued in respect thereof; and on any
such payment being made those amounts shall form part of the assets of the
Exchange Company and be available to the liquidator for distribution in
accordance with the Companies Ordinance (Cap. 32).
PART IX MISCELLANEOUS PROVISIONS
99. Procedure on appeal
An appeal to the High Court under this Ordinance shall be made within such
time and in such manner, and shall be heard in accordance with such
procedure, as may be prescribed by rules of court made under the Supreme
Court Ordinance (Cap. 4).
100. Report of certain matters regarding shareholder
(1) Where the management committee becomes aware of any matter which
adversely affects or is likely to adversely affect the ability of a
shareholder to meet his legal obligations as a dealer, the management
committee shall report the matter to the Commission in writing as soon as
practicable after it becomes aware of the matter.
(2) Where the membership of a shareholder is suspended, or a shareholder
is expelled from membership, by the Exchange Company, the management
committee shall report the matter to the Commission in writing within 3
trading days after such suspension or expulsion, as the case may be.
(Amended 10 of 1989 s. 65)
101. Notification by dealers of their financial year
Every dealer, other than a director, partner or employee of a corporation
or firm who is accredited to the corporation or firm as a dealer, shall
notify the Commission in writing of-(Amended 10 of 1989 s. 65)
(a) the period of the financial year adopted by him and of the date on
which it ends; and
(b) any changes in the period of the financial year or the date on which
it ends.
102. Supply of copies of rules to the Commission
The Exchange Company shall furnish promptly to the Commission copies of
all rules of a commodity market made or issued and all proposed changes to
such rules.
103. Production of records, etc., by the Exchange Company, etc.
(1) The Exchange Company, and every clearing house, guarantee corporation
and dealer shall-
(a) produce such books, accounts and records kept by it or him in
connection with or for the purposes of its or his business or in respect
of any trading in commodity futures contracts; and
(b) provide such other information relating to its or his business or any
trading in commodity futures contracts,
as the Commission may require.
(2) If the Exchange Company, a clearing house, a guarantee corporation or
any dealer, without reasonable excuse, fails to comply with any
requirement under subsection (1), the Exchange Company, clearing house,
guarantee corporation or dealer, as the case may be, shall be guilty of an
offence and shall be liable on conviction to a fine of $50,000.
(Amended 61 of 1985 s. 44)
104. Godown operators to keep records
An operator of a godown registered under the rules of the Exchange Company
shall make such reports and keep such records, and permit inspection of
such records and the godown, as the Commission may require.
105. (Repealed 10 of 1989 s. 65)
106. Prohibition of use of title "commodity exchange", etc.
(1) No person at any time more than 6 months after the commencement of
this section, other than the Exchange Company in respect of the Commodity
Exchange, shall-
(a) take or use any of the following titles or descriptions-
(i) commodity exchange;
(ii) futures exchange;
(iii) Hong Kong Commodity Exchange Limited;
(iv) Hong Kong Futures Exchange Limited; or (Replaced 61 of 1985 s. 45)
(b) take or use, or have attached to or exhibited at any place, any title
or description which resembles any of those specified in paragraph (a) or
so closely resembles any such title or description as to be calculated to
deceive. (Amended 61 of 1985 s. 45)
(2) A person who is not a dealer shall not-
(a) take or use the title or description "commodity dealer" or "futures
dealer"; or
(b) take or use, or have attached to or exhibited at any place, any title
or description that resembles those specified in paragraph (a) or so
closely resembles such title as to be calculated to deceive.
(Amended 61 of 1985 s. 45)
(3) Any person who contravenes this section shall be guilty of an offence
and shall be liable on conviction to a fine of $50,000 and, in the case of
a continuing offence, to a further fine of $5,000 for each day during
which the offence continues.
107. Commodity trading advisory contracts
(1) No commodity trading adviser shall enter into a commodity trading
advisory contract with any person (in this section referred to as his
client), or extend or renew any such contract, or in any way perform any
such commodity trading advisory contract entered into, extended or renewed
after the commencement of this section, if the contract-
(a) provides for remuneration to be paid by the client to the commodity
trading adviser on the basis of a share of capital gains of the funds or
any part of the funds of the client;
(b) does not include a provision to the effect that an assignment of the
contract by the commodity trading adviser shall be made only with the
consent of the client; or
(c) does not include a provision to the effect that the commodity trading
adviser-
(i) if a corporation, will notify the client of any change in the
directors of the corporation; or
(ii) if a firm, will notify the client of any change in the partners of
the firm, within a reasonable time after the change.
(2) Subsection (1) (a) does not prohibit a commodity trading advisory
contract which provides for remuneration based on the total value of a
fund averaged over a definite period, or on definite dates, or taken on a
definite date.
(3) For the purposes of this section, "commodity trading advisory
contract" means a contract or agreement whereby a person agrees to act as
a commodity trading adviser or to manage any commodity trading or trading
account of a client, not being a company carrying on business as a
commodity trading company and registered as such under the Companies
Ordinance (Cap. 32).
(4) Any commodity trading adviser who enters into any contract in
contravention of subsection (1) shall be guilty of an offence and shall be
liable on conviction to a fine of $10,000. (Amended 54 of 1980 s. 5)
(5) Any commodity trading advisory contract entered into in contravention
of subsection (1) shall, notwithstanding anything in the contract, be
voidable at the option of the client.
108. Obstruction
Any person who-
(a) obstructs the Commission or any other public officer or any person in
the exercise or performance of any power, authority, duty or function
under this Ordinance; or
(b) without reasonable excuse, fails to produce any books, accounts,
records or documents that the Commission or a person authorized by the
Commission has, pursuant to any provision of this Ordinance, required that
person to produce for inspection by the Commission or the person so
authorized, (Amended 10 of 1989 s. 65)
shall be guilty of an offence and shall be liable on conviction to a fine
of $100,000 and to imprisonment for 2 years. (Amended 35 of 1982 s. 8)
109. Regulations
(1) The Commission may make rules for the better carrying out of the
purposes and provisions of this Ordinance, and in particular and without
prejudice to the generality of the foregoing, for all or any of the
following matters-
(a) the applications for registration of dealers, commodity trading
advisers, dealers' representatives and commodity trading advisers'
representatives, and matters incidental to such registration or renewal of
registration;
(b) (Repealed 10 of 1989 s. 65)
(c) prescribing the appropriate standards with respect to the
qualifications, experience and training of applicants for registration as
dealers, commodity trading advisers, dealers' representatives and
commodity trading advisers' representatives;
(d) providing for the examination of applicants for registration as
dealers, commodity trading advisers, dealers' representatives and
commodity trading advisers' representatives, and for the fees to be paid
for such examinations;
(e) providing for the exemption of such applicants from taking
examinations subject to such terms and conditions as may be prescribed;
(f) prescribing the particulars to be recorded in registers kept under
this Ordinance and the inspection of such registers;
(g) enabling the Commission to correct any errors in any register kept
under this Ordinance;
(h) enabling the Commission, on payment of the prescribed fee (if any), to
issue duplicate certificates of registration in the event of loss or
destruction of the original certificates of registration or duplicate
certificates of registration;
(i) requiring dealers and commodity trading advisers to exhibit their
certificates or registration at their places of business;
(j) providing for the application of deposits made by or in respect of
dealers;
(k) prescribing the particulars to be recorded in, or in respect of,
accounts kept by dealers under this Ordinance;
(l) prescribing the particulars to be recorded in the profit and loss
accounts and balance sheets and the information to be contained in
auditor's reports required to be lodged under this Ordinance on the annual
accounts of dealers;
(m) providing for the remuneration of an auditor appointed under this
Ordinance, and for the costs of an audit carried out under this Ordinance;
(n) prescribing any forms for the purposes of this Ordinance;
(o) prescribing anything which is to be or may be prescribed by
regulations.
(2) Where rules are made by the Commission under subsection (1), the
Governor in Council may make regulations providing that a
contravention of specified provisions of the rules shall be an offence and
may provide penalties therefor not exceeding a fine of $2,000 and
imprisonment for 3 months. (Replaced 10 of 1989 s. 65)
(3) Except as otherwise provided in this Ordinance, regulations made under
this section may be of general or special application and may make
different provisions for different cases or classes of case. (Amended 61
of 1985 s. 46)
(Amended 10 of 1989 s. 65)
110. Offence by corporations
(1) Where an offence under this Ordinance committed by a corporation is
proved to have been committed with the consent or connivance of, or to be
attributable to any neglect on the part of, any director or employee of
the corporation, or any person who was purporting to act in any such
capacity, he, as well as the corporation, shall be guilty of the offence
and shall be liable to be proceeded against and punished accordingly.
(2) Subject to subsection (3), for the purposes of this section, a person
is deemed to be a director of a corporation if he occupies the position of
a director by whatever name he may be called or is a person in accordance
with whose directions or instructions the directors of the corporation or
any of them act.
(3) A person shall not, by reason only that the directors of a corporation
act on advice given by him in a professional capacity, be taken to be a
person in accordance with whose directions or instructions those directors
act.
111. Liability of corporation operating a clearing house
Where any corporation operates or undertakes the operation of a clearing
house, all duties and obligations imposed by this Ordinance upon, and all
penalties that apply under this Ordinance to, a clearing house, are
imposed upon and apply to the corporation and for this purpose references
in this Ordinance to a clearing house shall be deemed to be references to
the corporation.
(Amended 61 of 1985 s. 47)
112. Liability of principal for act of agent
For the purposes of this Ordinance an act, omission or failure of any
employee, agent or other person acting for or on behalf of any individual,
corporation or firm within the scope of his office or employment shall be
deemed to be the act, omission or failure of such individual, corporation
or firm, as well as of such employee, agent or other person.
113. Provision against syndicated trading
(1) Subject to subsection (4), any dealer or dealer's representative who
makes or offers to make a futures contract, whether on his own behalf or
otherwise, with two or more individuals, or with a single individual
knowing or having reason to believe that the individual is acting on
behalf or for the benefit of two or more individuals, shall be guilty of
an offence and shall be liable on conviction to a fine of $25,000 and to
imprisonment for 1 year.
(2) Subject to subsection (4), any person who invites or offers to arrange
for-
(a) any individual to participate in a futures contract in which two or
more other individuals also participate or are likely to participate;
or
(b) any individual to make a futures contract knowing or having reasonable
cause to believe that the individual will do so on behalf or for the
benefit of two or more other individuals,
shall be guilty of an offence and shall be liable on conviction to a fine
of $25,000 and to imprisonment for 1 year.
(3) For the purposes of subsections (1) and (2)-
(a) an individual who makes a futures contract acts for the benefit of
every individual who shares in the profit or loss on the contract; and (b)
an individual participates in a futures contract if he shares in the
profit or loss on the contract.
(4) The Commission may by order published in the Gazette exempt any person
or contract or class or description of person or contract from subsections
(1) and (2).
114. Prosecution of offences
Without prejudice to the provisions of any other enactment relating to the
prosecution of criminal offences and without prejudice to the powers of
the Attorney General in relation to the prosecution of such offences, the
Commission may institute proceedings in respect of any offence against
this Ordinance that is punishable on summary conviction.
(Amended 10 of 1989 s. 65)
114A. Limitation on commencement of proceedings
(1) Notwithstanding section 26 of the Magistrates Ordinance (Cap. 227), an
information or complaint relating to an offence under this Ordinance may
be tried if it is laid or made, as the case may be, at any time within 3
years after the commission of the offence or within 12 months after the
first discovery thereof by the prosecutor, whichever period expires first.
(2) This section shall not apply in relation to an offence committed
before the commencement of the Commodities Trading (Amendment) Ordinance
1991 (9 of 1991). (Added 9 of 1991 s. 2)
115. Amendment of Schedule and sum specified in sections 31, 79, 82, 85
and 87
(1) The Governor in Council may, by order published in the Gazette,
amend-
(a) Schedules 1 and 2; and
(b) any sum specified in section 31 (1), 79 (2), 82 (1), 85 (1), 85 (2) or
87 (3). (Amended 61 of 1985 s. 48)
(2) When amending Schedule 1 the Governor in Council may include in either
part thereof any item capable of being the subject of a futures contract,
whether or not it is capable of being delivered. (Added 61 of 1985 s. 48)
116. Exclusion of provisions of Gambling Ordinance
The Gambling Ordinance (Cap. 148) shall not apply to any transaction to
which this Ordinance applies.
(Added 61 of 1985 s. 49)
117. Transitional provisions
(1) Any claim against the compensation fund arising out of the default of
a shareholder before the commencement of the Commodities Trading
(Amendment) Ordinance 1985 (61 of 1985) ("the amending Ordinance") shall
be governed by this Ordinance as if the amending Ordinance had not been
enacted and any such claim which is allowed or partially allowed. or in
respect of which a court order is made, under Part VIII shall be payable
out of moneys in the compensation fund immediately before the commencement
of the amending Ordinance.
(2) If the moneys in the compensation fund immediately before the
commencement of the amending Ordinance are insufficient to meet all claims
which are then outstanding and which, after such commencement. are
allowed, or partly allowed, or in respect of which court orders are made.
under Part VIII, the provisions of section 97 (1) shall apply but as if
all the words after the semicolon in that subsection were deleted.
(3) Any moneys other than accrued interest remaining in the compensation
fund immediately before the commencement of the amending Ordinance shall,
subject to the payment therefrom of claims payable under subsection (1),
be held to the credit of those shareholders in respect of whom the
Exchange Company contributed to the fund before the commencement of the
amending Ordinance and in respect of whom the Exchange Company remains
liable to contribute to the fund thereafter, such credit, at the
discretion of the Commission, taking the form of either-
(a) a set-off against the Exchange Company's liability in respect of that
shareholder under section 82 (1); or
(b) a cash payment to the Exchange Company.
(4) Interest accrued on moneys which were in the compensation fund
immediately before the commencement of the amending Ordinance shall be
dealt with by the Commission in accordance with section 83 (2) as amended
by the amending Ordinance.
(61 of 1985 s. 51 incorporated)
SCHEDULE 1 [s. 2] SPECIFIED COMMODITIES
PART I SPECIFIED COMMODITIES
1. Cotton.
2. Sugar.
3. Soybeans. (Added L. N. 268 of 1979)
4. Gold (Added L. N. 65 of 1980)
5. Hang Seng Index futures contracts. (Added L. N. III of 1986)
6. Three month Hong Kong Interbank Offered Rate futures contracts. (Added
L. N. 415 of 1989)
7. Hang Seng Finance Sub-Index futures contracts. (Added L. N. 253 of
1991)
8. Hang Seng Utilities Sub-Index futures contracts. (Added L. N. 253 of
1991)
9. Hang Seng Properties Sub-Index futures contracts. (Added L. N.
253 of 1991)
10. Hang Seng Commerce and Industry Sub-Index futures contracts. (Added L.
N. 253 of 1991)
11. Stock Indices. (Added L. N. 399 of 1992)
PART II
(Amended 61 of 1985 s. 50)
SCHEDULE 2 [s. 31] EXCHANGES
EXCHANGES
Australian Options Market
Chicago Board of Trade
Chicago Board Options Exchange
Chicago Mercantile Exchange
Commodity Exchange, Inc.
Deutsche Terminborse.
European Options Exchange
London International Financial Futures Exchange.
London Metal Exchange.
Marche a terme International de France
Marche des Options Negociables de la Bourse de Paris.
New York Cotton Exchange, Inc.
New York Futures Exchange
New York Mercantile Exchange
New York Produce Exchange, Inc.
New Zealand Futures and Options Exchange
Osaka Securities Exchange
Philadelphia Stock Exchange
Singapore International Monetary Exchange
Stockholm Options Market
Swiss Option and Financial Futures Exchange
Sydney Futures Exchange, Ltd.
Tokyo Grain Exchange
Tokyo International Financial Futures Exchange
Tokyo Stock Exchange
Tokyo Sugar Exchange
Toronto Futures Exchange
Winnipeg Commodities Exchange
(Amended L. N. 399 of 1992)
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