HONG KONG LEGISLATIVE COUNCIL 18 January 1989
香港立法局 一九八九年一月十八日
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commission adequate powers to carry out its tasks and providing the markets with the freedom they need to thrive and adapt to changing circumstances. But as several issues have attracted particular attention during the consultation process, it may be helpful if I were to touch upon these matters this afternoon.
The first is the nature of the relationship between the Government and the new commission and the need for there to be adequate accountability. As to accountability, I can assure Members that, although the commission will be outside the Civil Service, it will still be part of the wider government machinery and accountable to the Administration and to this Council. While the commission will have a great deal of autonomy in its day-to-day operations, any major changes to and developments in policy will still be subject to the approval of the Governor in Council.
As to the relationship between the new commission and the two exchanges, we have had extensive discussions with both exchanges on their relationship with the commission. We are agreed that, within the proposed regulatory framework, first line responsibility for maintaining the integrity, efficiency and fairness of markets and for ensuring the financial soundness and correct business conduct of members should rest with the exchanges. The commission, for its part, should monitor closely performance by the exchanges of their self- regulatory functions, give guidance, co-ordinate regulation within Hong Kong and internationally, and only use its power to direct the exchanges if it believes that they are failing to fulfil their regulatory responsibilities effectively.
Sir, for the system to work, there must be close, frequent and regular two- way contact and co-operation between the commission and the exchang. Without seeking to interfere in the day-to-day management of the exchanges, the commission must be able to keep itself informed of market activities and the conduct of members. In exercising their regulatory functions, as well as in promoting the development of our financial markets, the commission and the exchanges have similar interests and objectives and will need to work together in harmony, I stress the words "in harmony", to ensure that their respective resources and powers are used in the most effective and efficient manner.
The provisions of the Bill regarding the powers of the commission over the exchanges and the respective roles of the commission and the exchanges follow very closely the recommendations of the Securities Review Committee, except that we have made provision in the Bill for the commission to be able to transfer to the exchanges certain functions additional to those envisaged in that report. It is our intention that, as and when the two exchanges develop their role as self- regulatory organizations, an increased part of the regulatory and supervisory functions should be devolved to them. I intend, Sir, at the Committee Stage of