HKEx To Boost Investor Protections

by Philip Morton, Investors Offshore.com

03 August 2006

The Government will back Hong Kong Exchanges and Clearing's move to explore ways to promote two types of investor services to increase protection for investors who trade through stock brokers, according to Secretary for Financial Services and the Treasury, Frederick Ma.

In his FSTB & You column, published on Monday, Mr Ma revealed that the two services in question are the Investor Participant Account service and the Stock Segregated Account service.

An Investor Participant Account is a direct-custody account in the Central Clearing & Settlement System for investors, providing them with the convenience of electronic book-entry settlement. An investor has full control of shares kept in his IP account and only the investor can authorise the transfer of shares out of his account.

As regards the Stock Segregated Account, after opening the account with a broker or custodian, whenever there is a stock movement in the account, the HKEx will give the investor concerned a daily movement statement showing movements of the stock during that day.

At the end of each month, the Securities Clearing Company will also give the investor concerned a monthly balance statement showing the balances of all stocks.

Mr Ma went on to observe that:

"As the market grows stronger, it will certainly bring enormous opportunities for the securities industry. In view of the increasingly keen competition, all securities firms, regardless of size, need to strive for continuous improvements, broaden the scope of services, increase their professional knowledge, ensure their conduct is worthy of their clients' trust, and provide clients with higher quality and more diversified services."

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