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WEDNESDAY, FEBRUARY 27, 1985
+I SHALL THEREFORE IN DUE COURSE BE APPROACHING THE GOVERNOR IN COUNCIL WITH A RECOMMENDATION THAT HE SHOULD ORDER THE NECESSARY AMENDMENT TO THE FIRST SCHEDULE OF THE DEPOSIT-TAKING COMPANIES ORDINANCE.
+TO ALLOW AN ADJUSTMENT PERIOD, I WILL PROPOSE THAT THE NEW LIMIT TAKE EFFECT ON MARCH 1, 1986.
+ IN OTHER WORDS, I AM TODAY GIVING 12 MONTHS' NOTICE. FOR THE AVOIDANCE OF DOUBT LET ME ALSO SAY THAT ANY DEPOSITS IN THE $50 000 TO $100 000 BRACKET ALREADY IN PLACE WITH REGISTERED DTCS WHEN THE NEW LIMIT TAKES EFFECT WOULD BE PERMITTED TO RUN TO MATURITY.+
SIR JOHN SAID NO CHANGE WAS PROPOSED TO THE $500 000 THRESHOLD FOR DEPOSITS WITH LICENSED DTCS, WHICH DATED ONLY FROM 1981 AND STILL ADEQUATELY REFLECTED A REASONABLE DEFINITION OF WHOLESALE BUSINESS, THAT WAS THE ORIGINAL INTENTION.
HOWEVER, THE DISCRETIONARY CRITERIA FOR THE GRANTING OF DTC
TWO LICENCES, ANNOUNCED ON APRIL 29, 1981, HAD BEEN REVIEWED. HAD BECOME OPEN TO CHALLENGE WITH THE PASSAGE OF TIME, HE SAID.
+ONE REQUIRES A COMPANY INCORPORATED OUTSIDE HONG KONG APPLYING FOR A DTC LICENCE TO HAVE BEEN A REGISTERED DTC ON OR BEFORE APRIL 10, 1981, THE DATE ON WHICH THE INTENTION TO CREATE THE LICENSED DTC CATEGORY WAS GAZETTED. THIS CRITERION WAS CONSIDERED NECESSARY AT THE TIME TO PREVENT A RUSH OF REGISTRATIONS FROM OVERSEAS INSTITUTIONS, WITH A VIEW TO SUBSEQUENT LICENCE APPLICATIONS.
+SINCE THEN, HOWEVER, THE LICENSED SECTOR HAS SETTLED DOWN AND ESTABLISHED ITS OWN IDENTITY. IT DOES NOT THEREFORE SEEM THAT ANY HARM COULD NOW BE DONE BY OPENING THE DOOR TO OVERSEAS COMPANIES WHICH HAVE REGISTERED AS DTCS MORE RECENTLY THAN APRIL 10. 1981, GIVEN THAT THE CRITERION OF A MINIMUM QUALIFICATION PERIOD OF THREE YEARS AS A REGISTERED DTC WOULD CONTINUE TO APPLY.+
SIR JOHN SAID THE OTHER CHANGE HE PROPOSED CONCERNED THE PRESENT REQUIREMENT THAT AN APPLICANT SHOULD BE IN GOOD STANDING IN THE HONG KONG (AND IF RELEVANT, INTERNATIONAL) MONEY MARKETS'.
HE SAID: THIS CRITERION HAS BEEN INTERPRETED TO REFER TO STANDING AS A PRINCIPAL IN THE MONEY MARKET, AND HENCE TO REQUIRE THE HOLDING OF SIZEABLE POSITIONS IN THAT MARKET. BUT THE TRUE INTENTION IS THAT AN APPLICANT MUST ENJOY GOOD STANDING WITHIN THE FINANCIAL COMMUNITY. THIS WILL BE THE REVISED CRITERION.-
EARLIER, SIR JOHN OBSERVED THAT A TEAM FROM THE BANK OF ENGLAND HAD BEEN IN HONG KONG A YEAR AGO TO ASSIST THE AUTHORITIES IN A 'REVIEW OF OUR SYSTEMS OF PRUDENTIAL SUPERVISION OF BANKS AND DTCS'.
HE SAID ✰