knowledge
and
evolving
industry,
of
the
settlement
experience to cope with the
and expanding securities and insufficiently independent
governing Committee.
The
system, based on a 24-hour
cycle, had failed to function properly and
indeed could not have been expected to do
so in the face of the increasing volumes
and internationalisation of the market.
There were serious shortcomings in the
listing arrangements, and surveillance of
members
Thus, while the
governing Committee had been successful in
developing the business of the Exchange,
they had not introduced proper management
and regulatory arrangements and, in
particular, had failed to take into
account the risks in an overheated system;
was cursory.
was
(b) at the re-vamped Hong Kong Futures
Exchange (7),
the
management
somewhat better but was built on shaky
foundations.
In particular, the
tripartite structure of Exchange, Clearing
House and Guarantee Corporation confused
lines of responsibility and effectively
obstructed the development of an adequate risk management system, which is essential to any futures market. All three agencies
should have acted to contain the dangers
in
the expansion of business and the build
of large positions by a few investors;
up
(7) It
was. relicensed in 1984 after an earlier crisis and subsequently reorganised.
4