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| COMMODITY EXCHANGE COMPENSATION FUND FINANCIAL STATEMENTS |
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| Commodity Exchange Compensation Fund |
| Notes to the Financial Statements |
| For the year ended 31st March 1998 (Expressed in Hong Kong Dollars) |
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| I |
MONEY CONSTITUTING THE FUND |
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The Fund is derived principally from monies paid to the Securities and Futures Commission (SFC) by the Hong Kong Futures Exchange Limited (HKFE) by way of deposits in respect of its shareholders, by way of a contract levy chargeable on contracts traded on the HKFE, from the return or profit on the investment of surplus funds and from monies recovered by or on behalf of the SFC by the exercise of any right of action conferred by Part VIII of the Commodities Trading Ordinance (Chapter 250)("the CTO"). |
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| 2 |
PURPOSE AND LIMITATION |
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The purpose of the Fund is to meet claims, as determined and allowed by the HKFE, for pecuniary losses suffered by persons as a result of defaults on the part of shareholders of the HKFE.
The total amount of compensation that may be paid to claimants consequent upon the default of any one shareholder is normally limited to $2,000,000 pursuant to Section 87(3) of the CTO. If the aggregate of allowed claims in respect of a shareholder exceeds the $2,000,000 limit, that amount shall be apportioned among claimants as determined to be equitable by the HKFE.
Should defaults at any given time on the part of shareholders of the HKFE give rise to allowed and/or apportioned claims exceeding the net assets of the Fund, compensation payments to claimants would be apportioned in accordance with Section 97(1) of the CTO, the unpaid amount of such allowed and/or apportioned claims being charged against further receipts by the Fund and paid out as and when money is available. |
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| 3 |
ACCOUNTING POLICIES |
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These accounts have been prepared in accordance with Hong Kong Statements of Standard Accounting Practice and accounting principles generally accepted in Hong Kong. A summary of the significant accounting policies is set out below : |
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a |
Interest income and contract levy are recognised in the financial statements on an accruals basis. The contract levy is taken directly to the Fund. |
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b |
Premium or discount on the purchase of dated securities is amortised or accreted respectively to the income and expenditure account on a straight line basis over the holding periods to redemption. |
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c |
Provision for compensation is made for known liabilities arising from claims for pecuniary losses suffered by persons as a result of defaults on the part of the shareholders of the HKFE which are determined up to the date on which the accounts are approved by the Committee. Such provisions are transferred directly from the Fund. |
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d |
Recovery of any payment out of the Fund in respect of any claim under subrogation pursuant to Section 95 of the CTO is recognised in the financial statements on a cash basis and taken directly to the Fund. |
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e |
Investments, representing dated securities which are intended to be held to maturity, are stated at cost adjusted for the amortisation of premiums and accretion of discounts on purchase over the holding periods to redemption, and less provisions where there has been a permanent diminution in value. |
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f |
The Fund is exempt from taxation pursuant to Section 87 of the Inland Revenue Ordinance, Chapter 112. |
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| l.................................................................................................................................................... |
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Dated securities |
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maturing after one year |
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- listed in Hong Kong |
$ 4,004,844 |
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$ 4,008,476 |
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- unlisted |
47,068,294 |
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28,020,752 |
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$ 51,073,138 |
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$ 32,029,228 |
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......................... |
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maturing within one year |
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- listed outside Hong Kong |
$ 2,005,909 |
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- |
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- unlisted |
6,000,000 |
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18,000,521 |
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$ 8,005,909 |
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$ 18,000,521 |
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........................ |
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......................... |
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$ 59,079,047 |
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$ 50,029,749 |
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Market value at 31st March |
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- listed in Hong Kong |
$ 3,934,400 |
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$ 3,960,000 |
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- listed outside Hong Kong |
1,981,800 |
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- |
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- unlisted |
51,919,200 |
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46,002,500 |
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$ 57,835,400 |
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$ 49,962,500 |
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| 5 |
CONTRIBUTIONS FROM THE HKFE ON AND AFTER 23RD AUGUST 1985 |
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1998 |
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1997 |
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| l.................................................................................................................................................... |
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Balance brought forward |
$ 20,600,000 |
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$ 21,500,000 |
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Add: Contributions received during the year |
1,100,000 |
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800,000 |
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Deduct: Refunds to outgoing shareholders |
(700,000 |
) |
(1,700,000 |
) |
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Balance carried forward |
$ 21,000,000 |
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$ 20,600,000 |
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| 6 |
TRANSFER FROM INCOME AND EXPENDITURE ACCOUNT |
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| l.................................................................................................................................................... |
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Balance brought forward |
$ 13,371,819 |
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$ 10,320,439 |
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Transfer of surplus for the year |
4,122,854 |
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3,051,380 |
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Balance carried forward |
$ 17,494,673 |
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$ 13,371,819 |
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