massive 33% and a further $2 billion rescue package had to be put together overnight by the Government, the Hongkong and Shanghai Bank, Standard Chartered Bank and the Bank of China (3).
1.3.
Prior to October, the Hong Kong stock market, along with other world equity markets, had been on a strong uptrend for some time. The index had risen by 1,410 points or 55% to an all-time high of 3,950 over the nine months to 1 October, with turnover almost trebling.
From its inception
1.4.
stock
index
pace.
In
an
in May 1986, turnover at the futures market had grown at an extraordinary September 1987, 601,005 lots were being traded, almost twenty fold increase over 17 months, so that protagonists could claim that it was the second largest index futures market in the world (4) neither the market systems kept pace.
its
1.5.
•
Unfortunately,
regulatory
infrastructure nor the
It was against this background that we were
We were
appointed by the Governor on 16 November 1987 (5) to review the constitution, management and operation of the two Exchanges and their regulatory bodies. directed to examine structures and systems critically rather than to allocate blame or conduct an inquiry into the causes and events of the crash.
(3)
(4)
In the event this second $2 billion was not needed.
Measured in numbers of contracts traded; it relatively much smaller in terms of the value of positions, see para. 3.4 below.
was
open
(5)
A list of the members of the Securities Committee is at Appendix 2.
Review
2
•