Compensation-Levy) (Amendment) Rules 2005
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The Secretary for Financial Services and the Treasury has appointed today (October 28) as the commencement date of the Securities and Futures (Investor Compensation – Levy) (Amendment) Rules 2005 (Amendment Rules).
A Government spokesman said the Amendment Rules provided for an automatic levy suspension and reinstatement mechanism, whereby the investor compensation levy would be suspended when the net asset value of the Investor Compensation Fund (ICF) exceeded $1.4 billion, and reinstated when the net asset value of the ICF fell below $1 billion, which is the minimum prudent level required to cover the Fund's potential obligations.
The current investor compensation levies are set at 0.002% per securities transaction executed on the Stock Exchange of Hong Kong Limited and $0.5 ($0.1 for smaller sized contracts) per futures transaction executed on the Hong Kong Futures Exchange Limited.
At the end of September, the net asset value of the ICF was estimated to be $1.59 billion.
"The suspension of the investor compensation levy will reduce the transaction cost to be borne by investors and will be conducive to the development of Hong Kong's securities and futures markets," the spokesman said.
The Amendment Rules were tabled in the Legislative Council for negative vetting from July 6 to October 19. Upon expiry of this period, the Secretary for Financial Services and the Treasury appointed October 28 as the commencement date of the rules.
The Securities and Futures Commission (SFC), which is responsible for administering the ICF and for implementing and monitoring the operation of the levy suspension and reinstatement mechanism, has already commissioned the auditing of the ICF account under the Amendment Rules.
Subject to receiving the auditor's report and publishing the relevant notice in the gazette, it is expected that the exemption of the levy will become effective in mid-December.
"An announcement on the commencement of the exemption of levy will be made by the SFC in due course," the spokesman added.
Ends/Friday, October 28, 2005
Issued at HKT 16:16
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