TUESDAY, MAY 22, 1984
PROPOSAL FOR STOCK INDEX FUTURES MARKET ENDORSED
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THE EXECUTIVE COUNCIL TODAY ENDORSED THE SECURITIES AND COMMODITIES TRADING COMMISSIONS' RECOMMENDATIONS FOR REORGANISING THE HONG KONG COMMODITY EXCHANGE LTD. TOGETHER WITH THE PROPOSALS TO INTRODUCE A STOCK INDEX FUTURES MARKET IN THE REORGANISED EXCHANGE.
IT ALSO DIRECTED THAT ANOTHER REVIEW OF THE OPERATION OF THE EXCHANGE SHOULD BE CONDUCTED IN THREE YEARS' TIME TO ENSURE THAT THE REORGANISED EXCHANGE IS STILL FUNCTIONING EFFECTIVELY.
COMMENTING ON THE DECISION TODAY, THE FINANCIAL SECRETARY, SIR JOHN BREMRIDGE, EXPLAINED THAT THE RE-ORGANISATION OF THE HONG KONG COMMODITY EXCHANGE LIMITED WAS ONE OF THE CONDITIONS LAID DOWN FOR THE CONTINUATION OF THE COMMODITY EXCHANGE'S LICENCE.
ON REORGANISATION, THE COMMODITY EXCHANGE WILL CHANGE ITS
IT WILL HAVE A NEW NAME TO THE +HONG KONG FUTURES EXCHANGE+. MANAGEMENT BOARD, AND TIGHTER RULES ON MEMBERSHIP, SURVEILLANCE AND DISCIPLINE WILL BE INTRODUCED. ITS MEMBERSHIP WILL ALSO BE WIDENED TO PERMIT BANKS AND OTHER INTERESTED PARTIES TO TRADE ON THE EXCHANGE.
REFERRING TO THE DECISION ON THE STOCK INDEX FUTURES MARKET, THE FINANCIAL SECRETARY SAID: THE DECISION REFLECTS OUR BASIC BELIEF IN FREE ENTERPRISE AND COMMITMENT TO THE INFRASTRUCTURE ESSENTIAL FOR HONG KONG'S DEVELOPMENT AS A MAJOR FINANCIAL CENTRE. ADEQUATE SAFEGUARDS WILL CERTAINLY BE INCORPORATED TO PROTECT THE INTERESTS OF THE INVESTING PUBLIC.+
STOCK INDEX CONTRACTS HAVE CONSIDERABLE APPEAL AND USE ELSEWHERE. THREE U.S. FUTURES EXCHANGES, SYDNEY AND TORONTO NOW TRADE THESE CONTRACTS. LONDON BEGAN TRADING IN SUCH CONTRACTS THIS MONTH,
POTENTIAL MARKET USERS EXPECT THE STOCK INDEX FUTURES
THEY FEEL THAT SUCH CONTRACTS CONTRACTS TO BE A SUCCESS LOCALLY, SHOULD REDUCE VOLATILITY IN THE STOCK MARKET ITSELF AND LEAD TO MORE INTEREST IN INVESTMENT IN HONG KONG SHARES. MOREOVER, INVESTMENT MANAGERS AND PRIVATE INVESTORS WILL BE ABLE TO USE THE CONTRACTS TO HEDGE THEIR PORTFOLIOS AGAINST ADVERSE MOVEMENTS IN THE MARKET. THEY EXPECT THE STOCK INDEX FUTURES MARKET TO LEAD THE WAY FOR OTHER FINANCIAL FUTURES CONTRACTS IN HONG KONG.
THE DECISION TO INTRODUCE A STOCK INDEX FUTURES MARKET IN HONG KONG IS, HOWEVER, CONTINGENT UPON THE HONG KONG COMMODITY EXCHANGE LTD BEING PROPERLY RE-ORGANISED. CONTRACTS WILL NOT BE TRADED UNTIL SATISFACTORY RULES TO GOVERN THE MARKET AND TO PROTECT INVESTORS TOGETHER WITH THE NECESSARY LEGISLATION HAVE BEEN INTRODUCED. THE SECURITIES COMMISSION AND THE COMMODITIES TRADING COMMISSION HAVE BEEN ASKED TO SUPERVISE THIS WORK.
/+THE FINAL