CCASS urges plan to improve investor safety

In a bid to increase protection for investors, the Central Clearing and Settlement System (CCASS) will issue a consultation paper tomorrow recommending they be allowed independent accounts in the clearing system.

A source involved in preparing the paper said it would also propose investors be able to confirm the movement of their shares by phone to prevent the possibility of a broker selling their clients' stock without consent.

At present, the clearing system does not allow investors to use the clearing system directly, meaning they can only put their shares under their broker's account in the clearing house.

Thus, under the current system, if a broker illegally sells a client's shares, the investor cannot easily trace their movement since they are in the broker's account.

Another disadvantage to the present system is that if the brokerage firm defaults, client shares in the broker's account can be frozen in the clearing system.

The system's problems were highlighted last year when cash clients of collapsed securities houses, including Wei Xin Securities, Cheong Woon Securities and C. K. Securities, could only get their shares back after liquidators were appointed several months later.

In such an occurrence, investors may suffer losses because they are unable to sell their shares.