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

236. Establishment of compensation fund
(1) The Commission shall establish and maintain a compensation fund, to be known as the Investor Compensation Fund in English and “投資者賠償基金” in Chinese, for the purpose of providing, in accordance with rules made under section 244, a measure of compensation to clients of a specified person who sustain a loss by reason of a default committed by the specified person or any of his associated persons in connection with specified securities or futures contracts.
(2) In this section—
associated person (相聯者), in relation to a specified person, means—
(a) a person employed or otherwise engaged by the specified person;
(b) a person (first-mentioned person) who may under section 164 receive or hold client assets of the specified person, or an employee of the first-mentioned person; or
(c) such other persons as may be prescribed by rules made under section 244;

specified person (指明人士) means—
(a) an intermediary licensed or registered for Type 1 or Type 2 regulated activity;
(b) an intermediary licensed for Type 8 regulated activity; or
(c) such other person as may be prescribed by rules made under section 244;

specified securities or futures contracts (指明證券或期貨合約) means any securities or futures contracts listed or traded or to be listed or traded on—
(a) a recognized stock market or recognized futures market; or
(b) such other markets as may be prescribed by rules made under section 244.

237. Money constituting the compensation fund
(1) The compensation fund shall consist of—
(a) all amounts paid to the Commission or a recognized investor compensation company in accordance with rules made under this Part;
(b) all amounts paid by the Commission into the compensation fund under subsection (2)(b);
(c) all amounts paid into the compensation fund under sections 74(2) or (9)(b), 75(2) or (9)(b) and 76(11) of Schedule 10;
(d) all assets (whether in cash or otherwise) recovered by the Commission or a recognized investor compensation company in exercise of a right of action conferred by section 243 or 87;
(e) all amounts borrowed under subsection (2)(a);
(f) any return or profit received on an investment made under section 241;
(g) all other amounts lawfully paid into the compensation fund.
(2) With the consent in writing of the Financial Secretary, the Commission may—
(a) for the purpose of the compensation fund, borrow from any authorized financial institution on such terms and at such rates of interest as it considers acceptable and charge any investments acquired under section 241 by way of security for any such loan;
(b) pay into the compensation fund from its reserves such amount of money as it considers appropriate.

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

238. Management of compensation fund
(1) Subject to this Part, the Commission shall be responsible for the management and administration of the compensation fund, including the determination of a claim for compensation.
(2) The Commission may realize any of the non-cash assets of the compensation fund at such times as it considers appropriate and the proceeds of realization shall become part of the compensation fund.

239. Money to be kept in account
The Commission shall open at one or more authorized financial institutions one or more accounts and shall, pending their application in accordance with this Part, pay into or transfer to such account or accounts all amounts forming part of the compensation fund.

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

241. Investment of moneys
(1) The Commission may invest any money which forms part of the compensation fund and is not immediately required for any other purposes provided for by this Part—
(a) on fixed deposit with an authorized financial institution; or
(b) in securities in which trustees are authorized by law to invest trust funds.
(2) Any return or profit on an investment of moneys by the Commission under subsection (1) shall be added to the compensation fund.
(3) A fixed deposit receipt and other document evidencing the investment of moneys under subsection (1) may be kept in the office of the Commission or deposited for safe keeping with an authorized financial institution.

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

242. Payments out of the compensation fund
(1) Subject to this Part, there shall from time to time be paid out of the compensation fund as required and in such order as the Commission may determine one or more of the following amounts—
(a) all legal and other expenses incurred—
(i) in investigating or defending claims for compensation made under rules made under this Part;
(ii) in relation to the compensation fund;
(iii) in the exercise by the Commission of the rights, powers, and authorities vested in it by this Part or rules made under this Part in relation to the compensation fund;
(iv) in the performance by a recognized investor compensation company of a function transferred to it under section 80 or provided for under rules made under this Part;
(b) the expenses incurred in the management or administration of the compensation fund;
(c) the expenses incurred in obtaining insurance, surety, guarantee or other security, or in making any financial arrangement, in respect of claims for compensation made under rules made under this Part;
(d) interest on any sum borrowed under section 237(2)(a);
(e) the amounts of claims for compensation, costs of and incidental to the making and proving of such claims and interest on compensation, as allowed under rules made under this Part;
(f) all other money payable out of the compensation fund in accordance with rules made under this Part.
(2) Where the Commission considers that the amount at credit in either the Unified Exchange Compensation Fund or the Futures Exchange Compensation Fund is insufficient to enable—
(a) the payment of the amounts which the Commission considers to be necessary to meet any claims or likely claims against the Unified Exchange Compensation Fund or the Futures Exchange Compensation Fund (as the case may be); and
(b) the repayment of the amounts deposited in cash with the Commission under section 104 of the repealed Securities Ordinance or section 82 of the repealed Commodities Trading Ordinance (as the case may be),
then the Commission shall, subject to subsection (3), pay into the Unified Exchange Compensation Fund or the Futures Exchange Compensation Fund (as the case may be) out of the compensation fund such amount as it considers appropriate.
(3) The aggregate amounts paid under subsection (2) to the Unified Exchange Compensation Fund or the Futures Exchange Compensation Fund shall not exceed the respective aggregate amounts paid into the compensation fund under section 74(2) or 75(2) of Schedule 10 (as the case may be).

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

243. Subrogation of the Commission to rights, etc. of claimant on payment from compensation fund
(1) Where the Commission makes any payment out of the compensation fund in respect of any claim for compensation made under rules made under this Part—
(a) subject to subsection (1A), the Commission shall be subrogated, to the extent which that payment bears to the loss sustained (without taking into account any compensation paid or payable out of the compensation fund for the loss) by the claimant by reason of the default on which the claim was based, to all the rights and remedies of the claimant in relation to the loss; and (Amended 7 of 2004 s. 55)
(b) the respective rights of the claimant and the Commission in bankruptcy or winding up or by legal proceedings or otherwise to receive in respect of the loss—
(i) any sum out of the assets of the person concerned who is in default; or
(ii) any property held on trust by that person for the claimant,
shall rank equally.
(1A) The Commission is not subrogated to any rights and remedies of the claimant in respect of compensation from the Deposit Protection Scheme Fund established by section 14 of the Deposit Protection Scheme Ordinance (Cap. 581). (Added 7 of 2004 s. 55)
(2) All assets (whether in cash or otherwise) recovered by the Commission under subsection (1) shall become part of the compensation fund.

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

249. Dealing in listed securities or their derivatives (insider dealing)
For the purposes of section 245(2) and Division 4, a person shall be regarded as dealing in listed securities or their derivatives if, whether as principal or agent, he sells, purchases, exchanges or subscribes for, or agrees to sell, purchase, exchange or subscribe for, any listed securities or their derivatives or acquires or disposes of, or agrees to acquire or dispose of, the right to sell, purchase, exchange or subscribe for, any listed securities or their derivatives.