HONG KONG LEGISLATIVE COUNCIL 18 January 1989
香港立法局———————————一九八九年一月十八日
52
As far as the Government is concerned, we have accepted the recommendation that a new regulatory body should be established outside the Civil Service. In this connection, we have been concentrating our efforts in bringing the new body, to be called the Securities and Futures Commission, into existence.
The Securities and Futures Commission Bill, now before this Council, represents a first but important step in the overhaul of securities legislation in Hong Kong. The new Securities and Futures Commission, which I shall refer to as the commission, will take the lead in continuing the review process once it is in place. To put the provisions of the Bill in context, I would like to begin, Sir, by referring briefly to some of the major findings and proposals of the Securities Review Committee.
The committee found that one of the key factors hindering the growth of our securities industry was that it was not well regulated. While the entire system had originally been based on the concept of a high degree of self-regulation by the exchanges, in fact self-regulation and market self-discipline had failed to develop in Hong Kong. Furthermore, faced with a massive increase in the complexity of securities markets in recent years, the regulatory structure had become obsolete.
The committee believed that Hong Kong should aim to become the pre- eminent capital market in south-east Asia and, to that end, should promote the progressive internationalization of its securities markets. Hong Kong should seek to develop stable, orderly and fair financial markets which offered adequate The committee further protection to investors at a reasonable cost. recommended a practitioner-based regulatory system, but advocated the establishment of a single statutory body outside the Civil Service consolidating the functions of the Securities Commission, the Commodities Trading Commission and the Office of the Commissioner.
The new commission should be headed and staffed by full-time regulators and funded largely by the market. It should be charged with ensuring the integrity of markets and the protection of investors. In particular, the commission should ensure that the exchanges carried out effective self- regulation, and the commission should have extensive reserve powers to intervene if the exchanges fell down on the job.
In putting together the legislative proposals we have consulted thoroughly market organizations, professional bodies and advisory committees. As a result, we have introduced significant modifications into the Bill. I believe, Sir, that the Bill in its present form strikes the right balance between giving the new