Hongkong Clearing today (Tuesday) announced a 50 per cent reduction in the scrip fee (or registration and transfer fee) collected on deemed book close dates, from $1.50 to $0.75 per board lot with effect from 1 April 1999. The scrip fee collected on announced book close dates will remain at $1.50 per board lot.

In addition, Hongkong Clearing will waive the scrip fee on valueless rights issue; shares that have been delisted as a result of liquidation; and "exchange of shares" or equivalent corporate actions that do not involve the distribution of cash or stock benefits to shareholders.

Hongkong Clearing's Chief Executive, Stewart Shing, said: "It is our eighth fee reduction since the Central Clearing And Settlement System (CCASS) was implemented in 1992 and the second fee reduction in the current financial year. In November 1998, Hongkong Clearing has already reduced all scrip fees from $2.00 to $1.50 per board lot and introduced a 20 per cent discount on the stock settlement fee from 0.0025 per cent to 0.002 per cent. 

"The latest discount and waivers will benefit investors who hold low-value shares with no dividend payment during the year, and will reduce Hongkong Clearing's revenues by $23 million a year."

Hongkong Clearing is a non-profit distributing company. It uses accumulated surpluses, less amounts put aside to reserves that are used to finance infrastructure and future development, to fund fee discounts. As of 31 December 1998, the cumulative discounts provided to participants since the implementation of CCASS amounted to $1,549 million.

Below is the background information on scrip fee.

Background information on scrip fee

Share certificates deposited into the CCASS Depository are re-registered in the name of HKSCC Nominees Limited. Upon re-registration, Hongkong Clearing pre-pays a registration fee of $2.50 per board lot to the listed company's share registrar. Hongkong Clearing recoups the registration fee from CCASS Participants by collecting a scrip fee on the book close date announced by the listed company, or on the deemed book close date.

The deemed book close date refers to one of the following dates:
i) the 31st of December, if a book close date has not been announced by the listed company in the past 12 months;
ii) the anniversary of the issue of a registered warrant;
iii) the date on which a stock is delisted from the Stock Exchange; or
iv) the event date announced by the listed company for a meeting that does not involve the distribution of cash or stock benefits.

Hongkong Clearing charges the scrip fee on the net increase per stock in the balance of a Participant's stock accounts since the date on which the fee was last collected.