FAQs

1.   Is there a limit for compensation amount under the Investor Compensation Fund
      ("ICF")?

2.   If I have a joint securities account with my spouse, what is the amount of
      compensation payable to each of us?

3.   I have a sole name securities account in the defaulting intermediary. My spouse has
      contributed funds for purchasing the securities in the securities account. Is my
      spouse entitled to claim compensation jointly with me in respect of the losses in
      my securities account as a result of the intermediary's default?

4.   If I have more than one securities account in the defaulting intermediary, am I
      entitled to compensation up to the HK$150,000 maximum for each of my
      securities account?

5.   If I have a securities margin account at the defaulting intermediary and I owe money
      to the intermediary, am I still protected under the ICF?

6.   I have cash in my securities account at the defaulting intermediary, will the cash be
      covered under the ICF?

7.   I hold shares of a Hong Kong listed company in my securities account at a
      brokerage firm. Will my loss be covered under the ICF if the listed company is
      wound up?

8.   If an investor has traded securities based on advice of a securities analyst and has
      suffered loss as a result. Can the investor claim compensation from the ICF?

9.   If a brokerage firm's online securities trading system is having technical problems
      and clients are unable to trade securities online. Is this regarded as a default? Can
      affected clients make a claim for compensation from the ICF in respect of the
      losses arising from such incident?

10. Will the ICF return securities to me as compensation for my loss?

11. If the closing prices of securities or futures contracts on the date of default was
      much lower than the price of the securities or futures contracts on the date when
      compensation was made to me, will the ICF compensate me for the difference in
      the price?

12. I previously received compensation from the ICF as a result of the collapse of ABC
      Brokerage Firm. I am also a client of XYZ Brokerage Firm which collapsed
      recently. Can I claim compensation from the ICF again in respect of such loss?
      Will the compensation amount payable to me be affected?

13. Am I eligible to claim compensation from the ICF if I am not living in Hong Kong?
      Can I ask another person to act for me in relation to my claim?

14. What documents are required to be submitted when I make a claim for
      compensation from the ICF?

15. How long will the assessment take and when can I receive the compensation?

16. How will I be informed of the outcome of the claim?




Answers

1.   Is there a limit for compensation amount under the Investor
      Compensation Fund ("ICF")?

Yes. The total amount of compensation that can be allowed in relation to securities traded at the Stock Exchange of Hong Kong Limited as a result of single default will not exceed HK$150,000 per claimant. The limit of the compensation is also HK$150,000 per claimant in relation to futures contracts traded at Hong Kong Futures Exchange Limited.

2.   If I have a joint securities account with my spouse, what is the amount of
      compensation payable to each of us?

The compensation limit is per investor. For a joint account, each of the account holders will be subjected to a maximum compensation limit of HK$150,000.

3.   I have a sole name securities account in the defaulting intermediary.
      My spouse has contributed funds for purchasing the securities in the
      securities account. Is my spouse entitled to claim compensation jointly
      with me in respect of the losses in my securities account as a result
      of the intermediary's default?

You are entitled to claim compensation because you are a "qualifying client" of the defaulting intermediary (i.e. you are the account holder of the securities account). Your spouse is not entitled to claim compensation because he/she is not the account holder in respect of your securities account.

4.   If I have more than one securities account in the defaulting
      intermediary, am I entitled to compensation up to the HK$150,000
      maximum for each of my securities account?

No. The compensation limit is per investor per single default. You are only entitled to compensation up to a maximum of HK$150,000, regardless of the number of securities account you are holding in the defaulting intermediary.

5.   If I have a securities margin account at the defaulting intermediary and
      I owe money to the intermediary, am I still protected under the ICF?

Yes. But when calculating losses to be compensated to you, we will deduct the amount that you owe to the defaulting intermediary from your loss due to the default of the intermediary.

6.   I have cash in my securities account at the defaulting intermediary,
      will the cash be covered under the ICF?

Yes. Cash in an investor's securities account or futures contracts account at the defaulting intermediary is also covered under the ICF. But the cash should relate to the purchase or sale of securities or futures contracts.

7.   I hold shares of a Hong Kong listed company in my securities account at
      a brokerage firm. Will my loss be covered under the ICF if the listed
      company is wound up?

No. ICF is established to pay compensation to investors who suffer pecuniary losses as a result of a default of a licensed intermediary or authorised financial institution in relation to exchange-traded products in Hong Kong. ICF does not cover investors' losses resulting from other causes such as losses sustained as a result of the winding up of a listed company.

8.   If an investor has traded securities based on advice of a securities analyst
      and has suffered loss as a result. Can the investor claim compensation
      from the ICF?

No. Investors are not entitled to claim against the ICF in respect of their losses suffered as a result of trading securities relying on any advice received from any person or information from TV, newspapers or the internet.

9.   If a brokerage firm's online securities trading system is having technical
      problems and clients are unable to trade securities online.   Is this
      regarded as a default?   Can affected clients make a claim for
      compensation from the ICF in respect of the losses arising from such
      incident?

"Default" is defined in the Securities and Futures (Investor Compensation - Claims) Rules. It means an intermediary, its employee or its associated person is in bankruptcy, winding up, or insolvency, or breach of trust, defalcation, fraud, or misfeasance. The failure of providing the online trading service due to technical problems does not fall into the definition of default under the Claims Rules, and thus investors are not eligible to lodge a claim in respect of their losses arising from such incident.

10.   Will the ICF return securities to me as compensation for my loss?

No. We will only pay your entitled compensation amount in cash. The amount of the compensation is calculated according to the closing prices of securities on the date of default.

11.  If the closing prices of securities or futures contracts on the date of
       default was much lower than the price of the securities or futures
       contracts on the date when compensation was made to me, will the
       ICF compensate me for the difference in the price?

No. The compensation amount is calculated according to the closing prices of securities or futures contracts on the date of default. We will not make any adjustments to the compensation amount no matter whether the prices of the securities or futures contracts rise or fall after the date of default. Also, a claimant's compensation amount will not be reduced if the prices of the securities or futures contracts fall after the date of default.

12.  I previously received compensation from the ICF as a result of the
       collapse of ABC Brokerage Firm. I am also a client of XYZ Brokerage
       Firm which collapsed recently. Can I claim compensation from the ICF
       again in respect of such loss? Will the compensation amount payable to
       me be affected?

The collapse of ABC Brokerage Firm and the collapse of XYZ Brokerage Firm are two separate incidents. If you are a client of XYZ Brokerage Firm and you have suffered loss resulting from its collapse/default, you can claim compensation from the ICF. The maximum compensation amount you will receive in respect of the default of XYZ Brokerage Firm is still HK$150,000.

13.  Am I eligible to claim compensation from the ICF if I am not living in
       Hong Kong? Can I ask another person to act for me in relation to my
       claim?

You are eligible to claim compensation from the ICF regardless of your nationality or residency. It is preferably that the claimant completes the compensation claim form personally. The claimant should sign on the compensation claim form.

Please note that during the process of handling a claim, we may request the claimant to attend our office for an interview, and nobody can act for the claimant in this respect.

14.  What documents are required to be submitted when I make a claim for
       compensation from the ICF?

To substantiate your claim initially, you have to submit copies of documents that the defaulting intermediary has given or sent you about your investments and account position. These might include, but not limiting to the following:

1. Account agreement,
2. Monthly account statements,
3. Contract notes,
4. Proof of payment such as pay-in slips and bank statements,
5. Deposit receipts for securities,
6. Dishonoured cheque, and
7. Hong Kong identity card or passport, or business registration.

The more evidence you can provide, the easier it will be to deal with your claim. If you cannot provide the required documents, or if further information is required from you, we may contact you for an explanation of events or submission of further material.

Therefore, we suggest you to keep proper records of the above documents, so that you can provide sufficient evidence for us to process a claim promptly in case of intermediary defaults.

15.  How long will the assessment take and when can I receive the
       compensation?

We will process claims received as quickly as possible. However, the determination process depends very much on the complication of the default, investigation and the legal process involved. Delay may also occur if you cannot provide the full supporting documentation. We will make payments to the allowed claimants as soon as practicable following the determination.

We pledge to issue and send an acknowledgement of receipt of the claim form to the claimants by post within 7 days of receipt. Claimants who do not receive an acknowledgement within 7 days should follow up with the ICC promptly.

16.  How will I be informed of the outcome of the claim?

After we have made a determination in respect of your claim, we will inform you of the decision as soon as possible by issuing a notice of determination and state the reason(s) for the decision in the notice. The notice of determination is normally posted to your address as reported in the claim form. You will be given a reasonable opportunity of being heard if you are not satisfied with our determination.

It is important that you keep us updated of any subsequent changes in the information submitted, such as change of address, contact phone number or amendments to the amount of your claims, etc. You should inform us in writing of these changes and quoting your case reference number.