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"THERE COULD BE FULL CAPITAL ADEQUACY REQUIREMENTS, ELABORATE REQUIREMENTS FOR THE MAINTENANCE OF ACCOUNTS AND CLEAR DOCUMENTATION, STANDARDISED MARGIN REQUIREMENTS, A CODE OF CONDUCT, AND POSSIBLY A COMPENSATION FUND.
"THE REGULATOR COULD BE GIVEN POWERS OF INSPECTION AND ENQUIRY, AND THERE COULD BE DISCIPLINARY PROCEEDINGS, SANCTIONS AND PENALTIES AGAINST MALPRACTICES, INCLUDING REVOCATION OF REGISTRATION," HE SAID.
SIR PIERS ADDED THAT HE HAD A CONCERN OVER SUCH AN OPTION.
"A NEW AND COMPREHENSIVE REGULATORY
EXPENSIVE FOR TAX PAYERS.
SYSTEM WOULD BE VERY
HE SAID AUTHORISED INSTITUTIONS UNDER THE BANKING ORDINANCE, WHICH WERE SUPERVISED BY THE COMMISSIONER OF BANKING, AND OTHER WELL-ESTABLISHED INSTITUTIONS OF INTERNATIONAL REPUTE PROVIDED OPPORTUNITIES TO INVEST IN FOREIGN CURRENCIES.
"THE EXTENT OF LEVERAGE THAT SUCH INSTITUTIONS ARE PREPARED TO OFFER MAY WELL BE LOWER, BUT THIS IS ON GROUNDS OF PRUDENCE AND IS, I BELIEVE, IN THE BEST INTERESTS OF INVESTORS THEMSELVES."
THE THIRD OPTION WAS TO RESTRICT ACTIVITIES ΤΟ INSTITUTIONS THAT WERE SUPERVISED BY THE EXISTING AUTHORITIES, FOR EXAMPLE, AUTHORISED INSTITUTIONS UNDER THE BANKING ORDINANCE, AND CERTAIN SPECIFIED PERSONS UNDER THE SECURITIES AND THE COMMODITIES TRADING ORDINANCES.
SIR PIERS SAID THE OPTION WOULD HAVE THE DISADVANTAGE HITTING EVERYBODY WHO WAS OUTSIDE THE EXISTING REGULATORY SYSTEM.
OF
AN
"PROVISION WOULD THEREFORE NEED ΤΟ BE MADE UNDER SUCH OPTION FOR THOSE WHICH ARE PRUDENTLY RUN TO OFFER THEMSELVES ΤΟ BE CONSIDERED FOR INCLUSION WITHIN THIS FRAMEWORK.
"THIS IS THE OPTION WE AT PRESENT FAVOUR,
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SIR PIERS SAID.
HE ADDED THAT AMENDMENTS TO LEGISLATION WOULD BE REQUIRED, AND FURTHER EXAMINATION OF THE MATTER WAS NECESSARY BEFORE A DECISION COULD BE TAKEN.
IN THE MEANTIME, THE GOVERNMENT HAD FREQUENTLY BEEN ISSUING "HEALTH WARNINGS" ABOUT THE RISKS OF DEALING WITH THESE UNREGULATED FOREIGN EXCHANGE COMPANIES.
SIR PIERS STRESSED THAT INVESTORS THEMSELVES HAD A RESPONSIBILITY.
"IT IS ALWAYS WISER TO RELY UPON THE SERVICES OF A REPUTABLE AND WELL-ESTABLISHED INSTITUTION EVEN IF THE RETURNS OFFERED SEEM LESS EXCITING," HE SAID.
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