changes in interest rates. Furthermore, in Hong Kong interest rates do and will continue to change frequently under the linked
exchange rate system.
29.
I do not want to
stifle financial innovation; our
philosophy is to leave the market to develop on its Own with only the minimum amount of regulation necessary to uphold its integrity. But the supervisor of authorised institutions must
also have regard to the interests of depositors. The new Banking Ordinance has introduced provisions which require
adequate capital to support risk assets on the books of
authorised institutions. Although these provisions have not yet
come into effect, because it was felt that a transitional period
of around two years would be required for adjustment, I hope
that these institutions are taking early action to capitalise
themselves adequately.
30.
The Banking Ordinance has now been in operation for six
months. So far all has gone smoothly. But some amendments to
clarify the meaning of certain provisions have been found
necessary.
These amendments are undergoing the usual
consultative process and, subject to the advice of the Executive
Council, I hope to introduce a bill within this session. In the
meantime, the Commissioner of Banking has been considering the
issue of guidelines on particular matters
undertaking of securities and other business
by authorised
institutions and on exposure to a single party. After
consultation, these guidelines will shortly be introduced by the
Commissioner under the appropriate sections of the Ordinance.
31.
such as the
On the securities side, the two controversial subjects,
disclosure of ownership of shares in public listed companies and
insider dealing, are being pursued. Recent events in other
financial centres have added a new dimension to our thinking.
As to disclosure, the Standing Committee
Standing Committee on Company Law Reform
and the Securities Commission have both considered and endorsed
a draft Bill. Subject to the advice of the Executive Council,
9
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