COMMODITY EXCHANGE COMPENSATION FUND FINANCIAL STATEMENTS

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Commodity Exchange Compensation Fund

Notes to the Financial Statements

For the year ended 3Ist March I 998 (Expressed In Hong Kong Dollars)

7	PROVISION FOR COMPENSATION

1998

1997

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	Balance brought forward	$        2,541,175		$      2,391,861
	Add:    Interest on outstanding claims	--		149,314
	Less:    Written back for the year	(2,541,175	)	--
	Balance carried forward	$                    --		$      2,541,175
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	Since 1989, a provision was made for the claims under appeal against the Fund in respect of four defaults and the interest accrued thereon. However, the claimants have not taken any actions to pursue their claims in court for several years. It is considered unlikely that the claimants will take any further action against the Fund. Therefore the provision was written back during the year.
8	RECOVERY UNDER SUBROGATION

1998

1997

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	Balance brought forward	$      11,499,524		$        9,584 051
	Add:   Amount recovered during the year	87,768		1,915,473
	Balance carried forward	$      11,587,292		$     11,499,524
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	Under Section 95 of the CTO, the SFC is entitled to receive in place of the claimant, all claims, remedies and distribution of surplus assets on liquidation of the dealer in relation to the loss sustained by the claimant, to the extent of the payment made by the SFC out of the Fund.
9	CONTINGENT LIABILITIES
	Up to the date of this report, claims against one shareholder have been received in response to a claim notice published on 29th May 1998 pursuant to section 89 of the CTO. Since the claims have not been determined, no provision for compensation had been made. According to the HKFE, the maximum liability of the fund to the claims is $2 million.