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1. As an investor, am I protected in any way against brokerage default?
You are protected under the Unified Exchange Compensation Fund (UECF). If your broker fails to meet its legal obligations, you will be entitled to claims from this pooled fund. Compensations are paid in cash for up to HK$8 million per broker in default. If the total claims allowed exceed this limit, you will receive an amount pro-rated according to the maximum claim allowed to you.
2. How do I make a claim and is there a time limit for filing?
You must lodge a claim with the Stock Exchange of Hong Kong within six months upon discovering the broker's default. If the exchange deems a broker to be in default, it may issue a claims notice in at least one English and one Chinese newspaper. If you are not aware of the default until the public announcement, you should file a claim by completing a claims form obtainable from the exchange within the period specified in the claims notice.
3. How long will it take to get compensated ?
The processing of claims is not subject to any statutory time limit. However, given that the UECF allows three months for claims submission and another three months for appeal after claims have been determined, the total processing time could be as long as six months and possibly much longer if a large number of claims is received.
4. Am I covered by insurance if I trade securities via a bank?
No, for the simple reason that a bank is not a member of the Stock Exchange. The Securities and Futures Commission allow banks to handle securities as "exempt dealers". However, as "authorised institutions" under the Banking Ordinance, banks are regulated by Hong Kong Monetary Authority (HKMA). If your bank is in default, you should bring the matter to the attention of HKMA.
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