A
1
For decision
31 May 1988
CONFIDENTIAL
PA/47
XCC (88) 78 Copy No
29
6.9..
MEMORANDUM FOR EXECUTIVE COUNCIL HKC 100/1
REPORT OF THE SECURITIES REVIEW COMMITTEE
The Problem
The
Securities Review Committee (SRC) has submitted its report and recommendations (Annex A). In view of widespread local and overseas interest in the subject, it is essential that Government gives an immediate initial response
to it.
Recommendation and Advice Sought
2
It is recommended that the Financial Secretary should make a statement welcoming the report on the lines of the attached draft.
B
3
Members will be asked to advise whether this recommendation should be approved.
Background
4
The crisis
in
international securities markets in October 1987 highlighted various shortcomings in the securities industry in Hong Kong. On 3 November 1987, having considered memorandum XCC (87) 164 (Annex B), the Council advised and the Governor ordered that a committee should be set up to review the constititution, powers, management and operation of the Hong Kong Stock Exchange (HKSE), the Hong Kong Futures Exchange (HKFE), the Securities Commission (SC), the Commodity Trading Commission (CTC) and the Office of the Commissioner for Securities and Commodities Trading (OCS). The SRC, appointed од 16 November 1987, with its terms of reference and membership as stated in paragraphs 2.1 to 2.3 and Appendix 2 of Annex A, was tasked to submit its report within six months. The report was submitted to the Governor on 27 May 1988.
Current Shortcomings
Whilst the October market closure and problems in futures market adversely affected Hong Kong's reputation and eroded confidence in its SRC has identified the following main
5
the
international
markets, the
shortcomings in the securities industry
CONFIDENTIAL