Past Chairman's Report

I am pleased to present my report on the Hong Kong Association of Online Brokers during the period I represented South China Securities Limited and took up the Chairmanship from September 2002 to August 2003.

South China Securities Limited was elected Chairman of the Association for one year at its 18th Committee Meeting on 12 September 2002 and succeeded the Founder Chairman, Tai Fook Securities Company Limited. Since then, I have been working closely with the fellow Committee Members and all other Members to fulfill the established objectives of the Association.

To promote communications, all Members have been encouraged to participate in Committee Meetings held on a monthly routine. Three Sub-committees have been formed to better involve Members to handle Operations/IT, Products/Promotion, and Regulatory/Compliance matters based on the respective terms of references.

In fulfilling the objectives to act as contact point and to provide forum for discussion of issues relating to the online securities and futures industry, the Association has attended all meetings organized by the market regulators and responded to all consultation papers issued by the Securities and Futures Commission, Financial Services and the Treasury Bureau, Legislative Council, Hong Kong Exchanges and Clearing, and Expert Group to Review the Operation of the Securities and Futures Market Regulatory Structure. The Association has thereby gained both exposure to and recognition by the securities and futures industry through actively participating in these meetings and consultations. Details of the meetings attended and the consultation papers responded are outlined in the attached tables.

During the period, the Association has approved the admission of Quam Securities Company Limited as a new Member and accepted the resignation from E*TRADE Securities (Hong Kong) Limited. The total number of Members remains at thirteen. The Association has decided not to be aggressive to recruit new members, but rather to stay prestigious and admit new members through their applications and based on Members’ assessments of the applicants’ contributions to the Association to meet its established objectives.

Based on the experience gained in the two years since its inception, the Association is going to propose two changes to its Constitution at the Annual General Meeting to be held on 27 August 2003. The number of Committee Members will be expanded from seven, nine or eleven to not more than thirteen, and the term of tenure of the Association’s Committee Members and Officials elected will be extended from one year to two years once the proposals are adopted.

The one year tenure for me to represent South China Securities Limited as Chairman of the Association is coming to an end after today’s Annual General Meeting. I would like to take this opportunity to thank the fellow Committee Members and all other Members, especially the Founder Chairman, Tai Fook Securities represented by Mr. Peter Wong, for their contributions and continued support throughout the period. I would also like to wish the Association and the succeeding Chairman all the best in the futures endeavours.

Stewart Shing
Chairman
27 August 2003

Meetings Attended

Market Regulator	Occasion	Date
Securities and Futures Commission	Process Review Panel	9 October 2002
	Regular meetings with industry associations	7 November 2002 / 11 December 2002 / 21 January 2003 / 26 February 2003 / 25 April 2003 / 30 May 2003 /28 July 2003
	Work Group on Categorization of Fees and Charges	6 May 2003 / 20 May 2003 / 15 August 2003
Financial Services and the Treasury Bureau	Working Group on the Business Environment of the Stockbroking Industry	28 January 2003 / 25 March 2003
	Briefing session on the Capital Investment Entrants Scheme	3 April 2003
	Briefing on Mainland - Hong Kong Closer Economic Partnership Agreement	2 July 2003
	Delegation to visit Guangdong Province	4 - 5 August 2003
Legislative Council (LegCo Panel on Financial Affairs)	Special meeting re Report of the Panel of Inquiry on Penny Stocks Incident and other related matters	20 September 2002
	Special meeting re business environment of the securities brokerage industry in Hong Kong	16 January 2003
	Special Meeting re Report of the Working Group on the Business Environment of the Stockbroking Industry	28 April 2003

Consultation Papers Responded

Organization	*Topic*	*Action Taken*	Month
Securities and Futures Commission	Draft proforma financial returns under the Securities and Futures (Financial Resources) Rules	Submitted comments	October 2002
	Draft Guideline Note for Short Selling Reporting and Stock Record Keeping Requirements	Reviewed and responded	November 2002
	Suggested control techniques and procedures for enhancing a firm’s ability to comply with Securities and Futures (Client Securities) Rules and Securities and Futures (Client Money) Rules	Reviewed and responded	December 2002
	Proposed Revisions to the Code of Conduct for Persons Registered with the Securities and Futures Commission	Submitted comments	December 2002
	Proposed Revisions to the Guidance Notes Issued by the Securities and Futures Commission on Money Laundering	Submitted comments	February 2003
	Guidance Note on Position Limits and Large Open Position Reporting Requirements	Submitted comments	February 2003
	Proposed Revisions to the Guidelines for Registered Persons Using the Internet to Collect Applications for Securities in an Initial Public Offering	Submitted comments	February 2003
	Soft consultation on the Guidelines on Competence	Submitted comments	March 2003
	Draft code on real estate investment trusts (REITs)	Submitted comments	April 2003
	Draft guidelines for regulating index tracking exchange traded funds under the code on unit trusts and mutual funds	Reviewed	April 2003
	Regulation of Sponsors and Independent Financial Advisers	Reviewed	July 2003
	Proposed Amendment to the Securities and Futures (Price Stabilizing) Rules in relation to Recognition of Overseas Rules	Reviewed	August 2003
Financial Services and the Treasury Bureau	Working Group on the Business Environment of the Stockbroking Industry invitation for views	Submitted views and proposals	February 2003
	Joint consultation with the SFC on Proposal to Empower the Securities and Futures Commission to Initiate a Derivative Action on behalf of a Listed Company	Submitted comments	July 2003
Legislative Council (LegCo Panel on Financial Affairs)	Invitation for views on Enhancement on the Regulation of Listed Companies and Corporate Governance of Companies	Responded	March 2003
Hong Kong Exchanges and Clearing	Alteration to the Trigger Conditions for provision of CCASS Pending Marks Relief	Submitted comments	August 2002
	Opinion survey on the co-trading proposal between HKEx and LSE	Reviewed and responded	November 2002
	Opinion survey on the Proposed Model for Trading CPI on HKEx	Reviewed and responded	March 2003
Expert Group to Review the Operation of the Securities and Futures Market Regulatory Structure	Invitation for views and comments	Submitted comments	November 2002

The Hong Kong Association of Online Brokers Limited

The Hong Kong Association of Online Brokers
Past Chairman's Report

Market Regulator

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Organization

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