The source of money comes mainly from the Investor Compensation Levy ("Levy") on Hong Kong exchange-traded product transactions. Effective from 1 January 2020, Levy is also payable by investors for the purchase or sale of 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 current Levy on securities transactions is 0.002% payable by buyers and sellers. For futures contracts, it is HK$0.5 per side of a contract or HK$0.1 per side of a mini contract or stock futures contract. In other words, for every HK$50,000 securities trading, the buyer and seller need to pay Levy of HK$1 each.
Other sources of the Fund are from investment income such as bank deposit interest and transfer from the Unified Exchange Compensation Fund and Commodity Exchange Compensation Fund.
In October 2005 a levy suspension and reinstatement mechanism was established whereby the Levy can be suspended when the net asset value of the Fund exceeds HK$1.4 billion, and subsequently reinstated when the net asset value of the Fund falls below HK$1 billion.
Effective from 1 January 2020, the trigger levels for suspension and reinstatement of the Levy are raised. The Levy suspension level is raised to HK$3 billion, and the Levy reinstatement level is raised to HK$2 billion.
Effective December 2005, the Levy has been suspended.