SCMP Report on Purported Broker Misconduct During August Market Operation

The South China Morning Post reported today (Saturday) that an investigation conducted by the Securities and Futures Commission ("SFC") found that a broker used by the Hong Kong Monetary Authority ("HKMA") during the market operation in August 1998 had made illicit profits on futures market transactions conducted on 13 August 1998. The report also claims that the HKMA has confirmed in the course of the investigation that it had intervened in the futures market for the first time on 13 August and not 14 August as previously announced.

Responding to the report, an HKMA spokesman reaffirmed that the actual market operation only started on 14 August 1998. In preparation for the operation, it was nevertheless necessary to test market conditions and the HKMA did transact a very small number of August Hang Seng Index Futures contracts just prior to market close on 13 August 1998.

"The HKMA is satisfied that the execution prices for the transactions on 13 August 1998 and thereafter were in line with market prices at the time of execution," the HKMA spokesman said.

Hong Kong Monetary Authority
27 March 1999