Major criticisms
1.6.
We found
that,
while
the entire system had
originally been based on self-regulation by the Exchanges with "the support of an authoritative and impartial body to assist them in taking action themselves to curb questionable
practices"(6)
the
concept
of
market self-discipline had failed to develop in Hong Kong. What is equally unfortunate is that, faced with this, the supervisory bodies charged with overseeing the markets had lost effective control.
self-regulation
1.7.
and
While our terms of reference required us to prepare a blue-print for the future rather than to allocate blame, it proved to be inevitable that our review would highlight defects in the past arrangements. These defects
came to our attention through submissions we received and discussions we held. We did not consider it part of our role to investigate in any detail but they were sufficient for us to form the view that major reforms were called for. In our view, they may be summarised as follows :
(a) at the Stock Exchange of Hong Kong, which
had opened in April 1986 after the unification of four smaller exchanges, an
inside group treated the Exchange as a private club rather than a public utility
for the general benefit of members,
and issuers. Its executive staff
ineffective, lacking adequate
investors
was
(6)
Statement by the then Financial Secretary, Sir Philip
Haddon-Cave, in the
1973, announcing Advisory Council, Commission.
the
the
Legislative Council on 3 January establishment of the Securities fore-runner of the Securities
3