Introduction of the Investor Compensation Fund

The Securities and Futures Ordinance, which became effective from 1 April 2003, provides for the establishment of the Investor Compensation Fund ("Fund"). The Fund is established to pay compensation to investors of any nationality who suffer pecuniary losses as a result of default of a licensed intermediary or authorized financial institution in relation to exchange-traded products in Hong Kong. For defaults occurring on or after 1 January 2020, the Fund also covers investors' losses in relation to securities traded on a stock market operated by the Shanghai Stock Exchange or the Shenzhen Stock Exchange and in respect of which an order for sale or purchase is permitted to be routed through the northbound link of a Stock Connect arrangement.

The Investor Compensation Company Limited ("ICC") is recognized by the Securities and Futures Commission to administer the Fund and process the claims. The ICC is responsible for receipt, determination and payment of compensation relating to defaults of licensed intermediaries and authorized financial institutions occurring on or after 1 April 2003.