Draft legislation for scripless trading in third quarter

The government is encouraging the development of full straight through processing (STP) for retail investors to enable trading, securities and money settlement to be conducted by a single instruction.

The Secretary for Financial Services and the Treasury, Mr Frederick Ma, told legislators today (May 14) that the administration had asked the Securities and Futures Commission (SFC) and Hong Kong Exchanges and Clearing (HKEx) to give priority to the development of a user-friendly and cost-effective Investor Participant (IP) Account model.

"This will help enhance the competitiveness of the small and medium sized brokerage firms," he said.

"We have also encouraged the stock broking industry to participate actively in the design and set up of the IP Account by offering their views to the Task Force on Investor Participant Account Enhancement."

Mr Ma said the HKEx planned to release the proposed detailed operational model for market consultation once it was finalised, with the target date for implementing the system in the first half of 2004.

As for STP for clearing and settlement, both the SFC and the HKEx were making progress in eliminating paper and manual processing that would tie in with scripless trading. This would further integrate the securities settlement and money payment systems, and adopt internationally acceptable communication standards.

Mr Ma said that in regard to introducing a scripless securities market, the SFC had conducted a market-wide consultation on the proposed model in February last year.

"We are now drafting the enabling legislation to allow for scripless trading. The draft legislation is targeted for public consultation in the third quarter of 2003 and introduction to the Legislative Council in the next legislative session," he said.

In parallel, Mr Ma said, the SFC was drawing up operational details of the scripless model for public consultation.

End/Wednesday, May 14, 2003