BRIEFING ON INVESTOR PARTICIPATION IN CCASS

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INVESTOR ACCOUNT SERVICE IN CCASS
March 2002
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Agenda
1. Background 2. Functions 3. Benefits 4. CCASS
Service Fees 5. Admission Criteria Account
Opening Procedure 6. Service Hours
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Background

• Investor Account Service in CCASS launched in
• May 1998
• A computerised book-entry clearing and
  settlement
• system for transactions in securities listed
  on the Stock
• Exchange of HK
• Design for individual and corporate investors
  in HK
• Accept BVI incorporated company in Dec 1999

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Functions

• An Investor Account is a depository account for
  share
• custody
• Purchases and sales of stocks made by Investor
• Participants (IP) and the resulting
  settlements will
• continue to be handled by CCASS Broker or
• Custodian Participants

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Transaction Flow
Buy/Sell order details IP A/C No.
BROKER
IP
Input ISI
Place order
Affirm ISI
AMS/3
CCASS
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Stock Transfer

• Investor Settlement Instructions (ISI) are
  used to
• initiate stock transfer and money settlement
• electronically through CCASS between Investor
• Participants and Broker, Custodian, Stock
  Lender or
• Stock Pledgee Participants

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Stock Settlement

• The ISI will be settled upon affirmation
• (if the affirmation datesettlement day, and
  there is
• sufficient stock in the Broker/Custodians
  stock
• account)
• OR
• To be settled on the stock settlement day
• (if the IP affirms the ISI before the
  settlement day)

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Money Settlement
Electronic money settlement between CCASS and
Participants
CCASS generates the following instructions for
money settlement
Electronic Payment Instruction (EPI)
Direct Debit Instruction (DDI) / Direct Credit
Instruction (DCI)
To process the money settlement of an ISI
between an IP and a Broker/ Custodian Participant
To process the money settlement between an IP
and CCASS e.g. dividend payment
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Money Settlement

• Following payment options available for ISI
  transaction
• Free of Payment (FOP)
• Money settlement is to take place outside CCASS
• and Hongkong Clearing is not involved
• IP should arrange with their counterparties if
• money settlement is required outside CCASS

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Money Settlement

• Delivery versus Payment (DVP)
• Shares settled in advance to money settlement
• An Electronic Payment Instruction (EPI) will be
  
• generated to IPs and non-IPs designated bank
  at
• day end of the settlement day to effect the
  payment.

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Money Settlement

• Delivery versus Payment (DVP)
• Funds will then be debited from or credited to
  the
• IPs designated bank account through the
  overnight
• interbank clearing process
• Receipt of payment must be monitored by both
• delivering and receiving parties

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Money Settlement

• Realtime Delivery versus Payment (RDP)
• Shares will be put on-hold in the delivering
• Participants (IP or non-IP) stock account
  upon
• affirmation
• CCASS will generate a CHATS payment instruction
  
• to the receiving Participants (IP or non-IP)
• designated bank to effect payment

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Money Settlement

• Realtime Delivery versus Payment (RDP)
• If the payment confirmation is received from the
  
• bank before 330pm, the shares will be
  delivered to
• the receiving party (IP or non-IP)
  immediately.
• Otherwise, the on-hold shares will be released
  back
• to the delivering party (IP or non-IP) and
  CCASS
• will continue the process on the next
  settlement day.

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Nominee Services

• Value-added service to our account holders
• Deposited shares re-registered under the name of
  HKSCC Nominees Limited
• Receive corporate information directly from
  listed issuers, e.g. annual reports and notices
• Hongkong Clearing will collect benefit
  entitlements for IP and distribute to their
  accounts electronically

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Nominee Services

• Apply for initial public offering and tender
  electronically via CCASS
• Hongkong Clearing will send statements and
  provide enquiry function to IP about the
  corporate actions and deadlines, such as
  subscription, voting dividend election

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Communicating with CCASS

• CCASS Phone Operations Hotline
• CCASS Internet System
• Customer Service Centre

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Statements

• Activity Statement details of activity done on
  the statement date
• Monthly statement stock balance and fees
  payable for the month

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Benefits

• Control over the movement of their shares
  deposited in CCASS
• Provision of evidence of their shareholdings in
  CCASS
• Enjoy better legal protection of their interests
  in shareholdings in CCASS
• Minimize settlement and default risks

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CCASS Service Fees

• Account-opening deposit 1,000 is waived until
• 30 June 2002
• Fee concession within first 10 settlement days
  from account opening day
• Transaction fees are charged on a user-pay
  principle

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CCASS Service Fees (Example)

• Dividend/Interest Collection Fee
• 0.12 of the cash amount of dividend/interest,
  subject
• to a minimum fee of 10 (or the gross amount
  of cash
• dividend/interest if smaller than 10), and a
  maximum
• fee of 500 per event of collection per stock
  or debt
• e.g. if the dividend 1,000
• Dividend/Interest Collection Fee 1,000 x 0.12
  
• 1.2
• Therefore, the collection fee is 10

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CCASS Service Fees (Example)

• ISI Stock Settlement Fee
• 0.002 of the gross value for each ISI
  transaction,
• subject to a minimum fee of 2 and a maximum
  fee
• of 100 for each transaction
• e.g. if the gross value 100,000
• ISI Stock Settlement Fee
• 100,000 x 0.002
• 2

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CCASS Service Fees (Example)

• Stock Custody Fee
• 0.012 per board lot or odd lot, subject to a
  minimum
• fee of 20 a maximum fee of 3,000 per month
• e.g. If month-end stock balance 1,000 board
  lots
• Custody fee for that month
• 1,000 board lots x 0.012 1.2
• Therefore, the Stock Custody Fee is 20

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Admission Criteria
Individual Investor Accounts

Joint Individual Investor Accounts
HKID Card Holders aged over 18 Up to a maximum
of 4 investors per account
HKID Card Holder aged over 18
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Admission Criteria
Corporate Investor Accounts?

• Corporations incorporated in HK under the HK
• Companies Ordinance, or by any legal entity
• incorporated in HK under HK Law
• Overseas Corporations incorporated in the
  British
• Virgin Islands (BVI) under the International
• Business Companies Act (IBC Act)

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Account Opening Procedure

• For individual and joint account, applicant(s)
  must come in person to our Customer Service
  Centre with the following documents
• Account Opening Form
• Investor Participant Debit Authorisations and
  Authorisation
• to Disclose Information Form
• Photocopy of he Hong Kong Identity Card

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Service Hours For Enquiry Hotline

• Investor Service Enquiry Hotline [phone]
• Service Day Time
• General Enquiries Daily 24 hours
• Operator Assistance Monday Friday 900am -
  600pm
• Saturday 900am - 100pm

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Service Hours For Customer Service Centre

• Customer Service Centre
• located at Upper Ground Floor, V-Heun Building,
• 128-140 Queens Road Central, Hong Kong
• Service Day Time
• General Enquiries Monday Friday 900am -
  600pm
• Opening of
• Investor Account

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