Description
LAWS OF HONG KONG
COMMODITIES TRADING ORDINANCE
CHAPTER 250
CHAPTER 250
COMMODITIES TRADING ORDINANCE
ARRANGEMENT OF SECTIONS
Section Page
PART 1
PRELIMINARY
1. Short title.....................................................................
........................................... 5
2. Interpretation ........................5
PART II
3-12. (Repealed) .........................8
PART III
COMMODITY
EXCHANGE
13. Licensing of the Commodity Exchange . 9
14. Approval of amendments to the constitution, rules of the Exchange
Company, etc . .....................10
15. Appointment of chief executive of Exchange Company to be approved by
Commission ........................1 ..1 11
16. Restriction on business in a commodity market 11
17. Disqualifications from becoming or remaining shareholders 11
18. Revocation of licence issued under section 13 11
19. Closure of the Commodity Exchange for non-compliance with section 13(3) ... 12
20. (Repealed) ..........................12
21. Closure of the Commodity Exchange in an emergency 12
22. Publication of notice of revocation or closure 13
23. Dealings in commodities prohibited during closure of Commodity Exchange.. 13
24. Prevention of entry into Commodity Exchange 13
25. Appeals .............................13
PART IV
REGISTRATION OF DEALERS, COMMODITY
TRADING
ADVISERS AND REPRESNTATIVES
26. Dealers to be registered ............14
27. Commodity trading advisers to be registered 15
28. Dealer's representatives to be registered 16
Section..................................... Page
29. Commodity trading adviser's representatives to be registered 16
30. Registration of persons under this Part 17
31. Deposits to be paid by dealers ........17
32. Refusal of registration ...............18
33. Disposal and accounts of deposits paid under section 31 20
33A........Amendment of conditions of certificate issued under section 30(2) 22
34. (Repealed) ............................23
35. Revocation of registration ............23
36. Powers of the Commission in relation to misconduct 24
37. Effect of revocation or suspension of registration 25
38-39. (Repealed) ........................25
40.................False representations in obtaining registration 25
41.................Information to be provided by registered persons 26
42................Commission to keep registers of registered persons 27
43................Publication of names of registered dealers, etc . 27
PART V
ACCOUNTS AND AUDIT
44..................................Interpretation 28
45..........................Accounts to be kept by dealers 28
45A............................Issue of contract notes 29
45B.............Dealers to provide certain information, etc. to client 30
46....................Monies to be paid into segregated accounts 31
47......Monies in segregated account not available for payment of debts, etc . 32
48...............Claims and liens on segregated accounts not affected 32
49.................Dealers to appoint auditors
...................................................................... 32
50.....................Dealers to lodge annual accounts, etc . 33
51..............Reports by auditor to the Commission in certain cases 33
52......................Power of Commission to appoint auditor 33
53........Power of Commission to appoint an auditor on application of client 34
54.......................Auditor to report to the Commission 35
55..................Powers of auditors appointed by the Commission 35
56.....................Offence to destroy, alter, etc. records 36
57...Restriction on auditor's and employee's right to communicate certain matters 36
58..........Exchange Company may impose additional obligations on members 37
Section.................................... Page
PART VI
TRADING PRACTICES
59. Fixing of trading and position limits .37
60. Ofrence to exceed limits ..............37
60A........................................Hawking of futures contracts 38
61. Dealing in options prohibited .........39
62. False trading, etc . ..................39
63. Employment of fraudulent or deceptive devices, etc . 39
64. False or misleading statements ........39
65. Offences ..............................40
PART VII
66-75. (Repealed) .......................40
PART VIII
COMPENSATION
FUND
76........................................Interpretation 40
77........................................Establishment of compensation fund 40
78........................................Futures Compensation Fund Committee 40
79........................................Money constituting the compensation fund 41
79A.......................................Contract levy 41
80........................................Money to be kept in bank account 42
81........................................Accounts of compensation fund 42
82........................................Exchange Company to make deposits in respect of shareholders 43
83........................................Investment of money in compensation fund 43
84........................................Effect of persons ceasing to be shareholders 44
85........................................Replenishment of compensation fund in certain cases 44
86........................................Payment out of the compensation fund 44
87........................................Claims against the compensation fund 45
88........................................Rights of innocent directors, etc. in relation to the compensation fund 46
89........................................Notice calling for claims against the compensation fund 47
90........................................Power of the Exchange Company in respect of claims 47
91........................................Exchange Company may require production of documents, etc . 48
92........................................Court proceedings to establish a claim against the compensation fund 49
93........................................Supplementary provisions relating to court proceedings 49
94........................................Court order establishing the claim 49
95. Subrogation of the Commission to rights, etc. of claimant on payment from
the compensation.................fund
................................................................................. so
Section..................................... Page
96. Payment of claims from the compensation fund only so
97. Provision where the compensation fund is insufficient to meet claims so
98. Power of Commission to return deposits on winding up of the Exchange
company ...........................51
PART IX
MISCELLANEOUS PROVISIONS
99. Procedure on appeal ..................51
100................Report of certain matters regarding shareholders 52
101................Notification by dealers of their financial year 52
102..................Supply of copies of rules to the Commission 52
103..........Production of records, etc., by the Exchange Company, etc . 52
104........................Godown operators to keep records 53
105...................................(Repealed) 53
106............Prohibition of use of title 'commodity exchange', etc . 53
107......................Commodity trading advisory contracts 54
108..................................Obstruction 54
109..................................Regulations 55
110............................Ofrence by corporations 56
ill..............Liability of corporation operating a clearing house 56
112....................Liability of principal for act of agent 57
113......................Provision against syndicated trading 57
114............................Prosecution of offences 57
115...Amendment of Schedule and sum specified in sections 31, 79, 82, 85 and 87 58
116.................Exclusion of provisions of Gambling Ordinance 58
117............................Transitional provisions 58
Schedule 1 ................................59
Schedule 2.........................................................................................................................
59
CHAPTER 250
COMMODITIES TRADING
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 1976L.N. 224 of 1976
Part IX 1 October 1976L.N. 253 of 1976
Part IV 1 January 1977L.N. 290 of 1976
Parts 11, VII 1 January 1977L.N. 318 of 1976
Part V, other than section 50 1 March 1977 L.N. 45 of 1977
Part VIII 27 April 1977L.N. 89 of 1977
Section 50 30 January 19801L.N. 19 of 1980
Originally 59 of 1976 79 of 1976, L.N. 268 of 1979, L.N. 65 of 1980, 54 of 1980, 9 of 1982,
35 of 1982,61 of 1985, L.N. 313 of 1985, R. Ed. 1985, L.N. III of 1986 27 of, 1986 40 of
1987, L.N. 387 of 1987, 10 of 1989, L.N. 259 of 1989, 3 of
PART 1
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 111;
'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;
'conunodity 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; (Added61 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 Multi-storey 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 fulfilment 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, quasi-contract 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;
'licensed deposit-taking company means a deposit-taking company licensed under the
Banking Ordinance (Cap. 155); (Added 61 of 1985 s. 2. Amended 27 of 1986 s.
137)
'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;
->'rules of the commodity market' means the rules governing the conduct of the
commodity market concemed or persons who trade in commodity futures
contracts in the commodity or commodities concemed, 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)
(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 11
3-12. (Repealed 10 of 1989 s. 65)
PART 111
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; (Added61 of 1985 s.
4)
(e) 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; (Amended61 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; (Added61 of
1985 s. 4)
(k)that the Company 'I 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;
(e)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 14 days after the receipt of any submission
under subsection (2), give notice in writing to the Exchange Company of
(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.
l> (Amended 61 of 1985 s. 5)
15. Appointment of chief executive of Exchange
Company to he 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
section79A(2); (Added61 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
non-compliance 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. (Repeated 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)
1976ed cap.250
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 he 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.]])
(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 fide 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 he 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
ofrence 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 ofrence continues. (Amended 54 of 1980 s. 2; 35 of
1982s.2)
29. Commodity trading adviser's representatives
to he 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
ofrence 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;
(e) 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 sub-
section (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 he 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- 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 sub-
section (1) without first giving the applicant an opportunity of being heard.
(3) Where the Commission refuses to register an applicant under sub-
section (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 3 1.
(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 3 1.
(6) The Commission shall open one or more accounts at a licensed bank into
which it shall pay all deposits paid under section 3 1, 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 3 1;
(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 3 1, 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 3 1, 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 10of 1989s. 65)
(Amended 10 of 1989 s. 65)
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;
(e) 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 ceases to carry on the business for which he was registered;
or
(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 ceases to carry on the business for which it was registered;
or
(e) 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 ceases to carry on the business for which it was registered.
(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
concemed in the management of the corporation or firm.
(2) After making such inquiry in respect of a registered person, the Commission
may if it thinks fit
(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.
(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 or the name of 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 he 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 fine of
$10,000 and to imprisonment for 6 months.
(9) If, in any records kept in accordance with this section, a person wilfully
(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 ofrence 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;
(1) 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 he 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 Deposit-taking Companies Ordinance (Cap. 32e) or a
licensed bank, one or more segregated account 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.
(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 1982s.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.
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 1 month subject to such conditions (if any) as the
Commission thinks fit to impose.
(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
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)
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 subsec-
tion (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 ofrence and
shall be liable on conviction to a fine of $50,000. (Amended 61 of 1985s.13)
56. Ofrence 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
ofrence 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)-(e) (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. Ofrence 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 ofrence
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
ofrence 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); (Added61 of 1985 s. 29)
(cb) moneys paid by the Exchange Company to the Commission in respect
of the contract levy; (Added61 of 1985 s. 29)
(d) all other amounts lawfully paid into the compensation fund.
(2) Subject to the approval of the Commmittee in respect of the rate of
interest payable on any particular loan, the Commission may for the purposes
of the compensation fund borrow form any licensed bank of licensed
deposit-taking company 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 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 flat 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;
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.
(Added61 of 1985 s. 30)
80. Money to he kept in bank account
The Commission shall open at one or more licensed banks or with one or
more licensed deposit-taking companies, 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. 3 1)
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.
(M) 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. (Added61 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 550,000 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 licensed deposit-taking
company or
(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 licensed deposit-taking
company.
(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 investigating or defending
claims 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); (Added61 of 1985 s.37)
(bb) interest on any sum borrowed under section 79(2); (Added61of
1985s.37)
(c)the amounts of all claims, including costs, allowed by the Exchange
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.
(M) 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.(Added61 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. (Added61 of 1985s.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. (Added61 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 1985s.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 com-
pensation 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 concemed 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 shareholders
(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)
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
19858.45)
(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 1980s. 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 1989s.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;
(1)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)
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)
or87(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. (Added61 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.
(Added61 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), he 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
23 August 1985
(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]
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.M] of 1986)
PART II
(Amended 61 of 1985 s. 50)
SCHEDULE 2 [s. 31]
EXCHANGES
Chicago Board of Trade
Chicago Mercantile Exchange
Commodity Exchange, Inc.
London Baltic Exchange
London Commodity Exchange
London Metal Exchange
New York Cocoa Exchange
New York Coffee and Sugar Exchange, Inc.
New York Cotton Exchange, Inc.
New York Mercantile Exchange
New York Produce Exchange, Inc.
Paris White Sugar Market
Sydney Futures Exchange, Ltd.
Tokyo Fibre Commodity Exchange
Tokyo Grain Exchange
Tokyo Rubber Exchange
Tokyo Sugar Exchange
Winnipeg Commodities Exchange