Press Release - Speech presented by Mr Anthony Neoh, Chairman of SFC to the Investor Participation in CCASS Luncheon on 26 March 1998, Hong Kong

Attached for your reference is a speech given today by SFC Chairman, Mr Anthony Neoh at a luncheon by the Hong Kong Securities Clearing Company to announce details of the Investor Participation Project in the Central Clearing and Settlement System.

For further information, please contact Bill Weeks at 2840-9289 or Chan Chi-keung at 2842-7624.

I would like to thank Hongkong Clearing for inviting me to this luncheon. Investor participation is an important step in enhancing investor protection in Hong Kong, and as recent events have shown, our investing public demands nothing less. Both Hongkong Clearing and the SFC have given a high priority to the issue of investor participation and everyone involved has been working very hard toward implementing the new framework. The public has been consulted on practical issues associated with investor participation and their collective opinions have been incorporated into the proposed model. I am glad to see that these effort have brought about the birth of a comprehensive investor participation system that has been introduced to you today.

I want to emphasize two points to Hong Kong investors. First, direct participation in CCASS gives them a new option for holding their shares. Each movement of shares in or out of an investor account must be affirmed by the investor before it can be effectuated. Investors therefore have complete control over their shares and Hongkong Clearing recognizes their ownership.

The second point that I want to emphasize today is that investor participation is an option given to investors. It is not mandatory for investors to utilize this direct participation mechanism, rather, it is their choice to decide whether or not to open their own accounts at CCASS, or to continue depositing their shares with brokers or custodians. Investors may also choose to retain physical control over the share certificates and register themselves directly with listed companies. Those who open accounts at CCASS will receive a wide range of CCASS nominee services: Hongkong Clearing will facilitate the distribution of entitlements accruing to their shares, the submission of their votes on corporate actions, and the exercise of rights or options associated with their shareholding. Investors may also choose to have their subscription for new shares in public offerings credited directly to their accounts at CCASS. This is an important step toward "scripless" offerings, which is a long-term goal of Hongkong Clearing.

Investor participation is likely to further reduce physical movements of share certificates. Having been given full control of shares in their own accounts, investors should feel safer to deposit their shares with CCASS and thus less inclined to possess physical control over the certificates. Immobilization of shares increases settlement efficiency and is the trend of security settlement all over the world.

I would like to conclude my remarks by congratulating Hongkong Clearing on bringing forth this important investor protection mechanism, and giving my sincere wish for its successful implementation in our market.