### Securities and Futures Ordinance 《證券及期貨條例》

37. Recognition of clearing house
(1) Where the Commission is satisfied that it is appropriate to do so—
(a) in the interest of the investing public or in the public interest; or
(b) for the proper regulation of markets in securities or futures contracts,
it may, after consultation with the Financial Secretary, by notice in writing served on a company, recognize the company as a clearing house—
(i) subject to such conditions as it considers appropriate specified in the notice; and
(ii) with effect from a date specified in the notice for the purpose.
(2) Without limiting the generality of conditions which may be specified in a notice under subsection (1), the Commission may, by notice in writing served on a recognized clearing house, amend or revoke any condition specified in the first-mentioned notice or impose new conditions, where the Commission—
(a) is satisfied that it is appropriate to do so on a ground specified in paragraph (a) or (b) of that subsection; and
(b) has consulted the Financial Secretary.
(3) Where the Commission amends or revokes any condition or imposes any new condition by a notice under subsection (2), the amendment, revocation or imposition takes effect at the time of service of the notice or at the time specified in the notice, whichever is the later.
(4) Where a company becomes a recognized clearing house, the Commission shall cause notice of that fact to be published in the Gazette.
(5) Where a company is seeking to be a recognized clearing house and the Commission is minded not to recognize the company under subsection (1), the Commission shall give the company a reasonable opportunity of being heard before making a decision not to recognize the company.
(6) Where the Commission refuses to recognize a company as a clearing house under subsection (1), the Commission shall, by notice in writing served on the company, inform the company of the refusal and of the reasons for it.

### Securities and Futures Ordinance 《證券及期貨條例》

38. Duties of recognized clearing house
(1) It shall be the duty of a recognized clearing house to ensure—
(a) so far as reasonably practicable, that there are orderly, fair and expeditious clearing and settlement arrangements for any transactions in securities, futures contracts or OTC derivative products cleared or settled through its facilities; and (Amended 6 of 2014 s. 5)
(b) that risks associated with its business and operations are managed prudently.
(2) In discharging its duty under subsection (1), a recognized clearing house shall—
(a) act in the interest of the public, having particular regard to the interest of the investing public; and
(b) ensure that the interest of the public prevails where it conflicts with the interest of the recognized clearing house.
(3) A recognized clearing house shall operate its facilities in accordance with the rules made under section 40 and approved under section 41.
(4) A recognized clearing house shall formulate and implement appropriate procedures for ensuring that its clearing participants comply with the rules of the clearing house.
(5) A recognized clearing house shall at all times provide and maintain—
(a) adequate and properly equipped premises;
(b) competent personnel; and
(c) automated systems with adequate capacity, facilities to meet contingencies or emergencies, security arrangements and technical support,
for the conduct of its business.

### Securities and Futures Ordinance 《證券及期貨條例》

39. Immunity, etc.
(1) Without limiting the generality of section 380(1), no civil liability, whether arising in contract, tort, defamation, equity or otherwise, shall be incurred by—
(a) a recognized clearing house; or
(b) any person acting on behalf of a recognized clearing house, including—
(i) any member of the board of directors of the clearing house; or
(ii) any member of any committee established by the clearing house,
in respect of anything done or omitted to be done in good faith in the discharge or purported discharge of the duties of the clearing house under sections 38 and 47 or in the performance or purported performance of its functions under its rules, including its default rules.
(2) Where, in the discharge or purported discharge of its duties under section 63, a recognized exchange controller gives an instruction or direction or makes a request to a recognized clearing house of which it is a controller, the clearing house’s duties under sections 38 and 47 or under its rules (including its default rules) are not applicable to the clearing house in respect of anything done or omitted to be done in good faith by the clearing house in compliance with the instruction, direction or request.
(3) Without limiting the generality of section 380(1), no civil liability, whether arising in contract, tort, defamation, equity or otherwise, shall be incurred by—
(a) a person performing, by virtue of a delegation under the default rules of a recognized clearing house, a function of the clearing house in connection with any default proceedings; or
(b) any person acting on behalf of a person referred to in paragraph (a), including—
(i) any member of the board of directors of that person; or
(ii) any member of any committee established by that person,
in respect of anything done or omitted to be done in good faith in the performance and purported performance of that function.
(4) Any failure by a recognized clearing house to comply with its rules in relation to a matter does not prevent the matter from being treated for the purposes of this Ordinance as done in accordance with the rules so long as the failure does not substantially affect the rights of a person entitled to require compliance with the rules.
(5) Where a relevant office-holder takes action in relation to property of a defaulter which is liable to be dealt with in accordance with the default rules of a recognized clearing house, and believes on reasonable grounds that he is entitled to take that action, he is not liable to any person in respect of any loss or damage resulting from his action except in so far as the loss or damage (as the case may be) is caused by the office-holder’s own negligence.

### Securities and Futures Ordinance 《證券及期貨條例》

41. Approval of rules or amendments to rules of recognized clearing house
(1) Subject to subsection (7), no rule (whether or not made under section 40) of a recognized clearing house or any amendment thereto shall have effect unless it has the approval in writing of the Commission.
(2) A recognized clearing house shall submit or cause to be submitted to the Commission—
(a) for its approval the rules and every amendment thereto that require approval under subsection (1), together with explanations of their purpose and likely effect, including their effect on the investing public, in sufficient detail to enable the Commission to decide whether to approve them or refuse to approve them; and
(b) for its information the rules which belong to a class the subject of a declaration under subsection (7) and every amendment to the rules, as soon as reasonably practicable after they have been made.
(3) The Commission shall, not later than 6 weeks after the receipt of a submission under subsection (2)(a) from a recognized clearing house, by notice in writing served on the clearing house, give its approval or refuse to give its approval (together with its reasons for the refusal) to the rules or amendment of the rules (as the case may be) or any part thereof, the subject of the submission.
(4) The Commission may give its approval under subsection (3) subject to requirements which shall be satisfied before the rules or amendment of the rules or any part thereof take effect.
(5) The Commission may in a particular case, with the agreement of the recognized clearing house concerned, extend the time prescribed in subsection (3).
(6) The Financial Secretary may, after consultation with the Commission and the recognized clearing house concerned, extend the time prescribed in subsection (3).
(7) The Commission may, by notice published in the Gazette, declare any class of rules of a recognized clearing house (except any default rules of the clearing house) to be a class of rules which are not required to be approved under subsection (1) and, accordingly, any rules of the clearing house which belong to that class (including any amendment thereto) shall have effect notwithstanding that they have not been so approved.
(8) Neither the rules under section 40 nor a notice under subsection (7) is subsidiary legislation.