WEDNESDAY, MARCH 6, 1991
41
"HONG KONG IS A COMMUNITY THAT HAS EVERY REASON TO HAVE FAITH
IN ITSELF.
"TODAY I HAVE PRESENTED A POSITIVE AND REALISTIC BUDGET FOR THE YEAR AHEAD AND BEYOND, AND AS SUCH I COMMEND IT TO THIS COUNCIL, SIR PIERS CONCLUDED.
MTRC AND KCRC (AMENDMENT) BILLS INTRODUCED
THE PURPOSE OF THE MASS TRANSIT RAILWAY CORPORATION (AMENDMENT) BILL 1991 IS TO PROTECT ALL PAST AND FUTURE TRANSACTIONS ENTERED INTO BY THE CORPORATION WHICH MIGHT BE AFFECTED BY A RECENT DECISION OF THE HOUSE OF LORDS, THE FINANCIAL SECRETARY, THE HON SIR PIERS JACOBS, TOLD THE LEGISLATIVE COUNCIL TODAY (WEDNESDAY).
IN MOVING THE SECOND READING OF THE BILL, SIR PIERS SAID:
"THE MASS TRANSIT RAILWAY CORPORATION (MTRC), AS PART OF THE OVERALL MANAGEMENT OF ITS FINANCING REQUIREMENTS, HAS ENTERED INTO A NUMBER OF TRANSACTIONS, INCLUDING SWAP TRANSACTIONS, DESIGNED TO REDUCE ITS EXPOSURE TO INTEREST RATE AND CURRENCY FLUCTUATIONS.
"A RECENT DECISION OF THE HOUSE OF LORDS HAS CAST DOUBT ON ABILITY OF THE CORPORATION TO ENTER INTO SUCH TRANSACTIONS UNDER EXISTING STATUTORY CONSTITUTION," HE SAID.
THE
İTS
IN THE CASE OF HAZELL V. LONDON BOROUGH OF HAMMERSMITH AND FULHAM, HANDED DOWN BY THE HOUSE OF LORDS ON JANUARY 24 THIS
YEAR, DOUBTS WERE CAST ON THE AUTHORITY OF STATUTORY CORPORATIONS TO ENTER INTO SWAP TRANSACTIONS, THE FINANCIAL SECRETARY NOTED.
ESTABLISHED
HE SAID THE CASE INVOLVED A UK LOCAL AUTHORITY, BY STATUTE, WHICH HAD EMPLOYED SWAP FACILITIES BOTH AS HEDGING MECHANISMS AND AS SPECULATIVE TRANSACTIONS.
LOCAL LOCAL
"THE HOUSE OF LORDS FOUND THAT, UPON THE INTERPRETATION OF THE GOVERNMENT ACT, THIS LOCAL AUTHORITY, AND INDEED ALL SIMILAR AUTHORITIES, HAD NO POWER WHATSOEVER TO ENTER INTO ANY FORM SWAP, SIR PIERS SAID.
17
OF
AN
FOLLOWING THIS HOUSE OF LORDS DECISION, THE MTRC OBTAINED OPINION FROM LEADING COUNSEL IN THE UK COUNSEL ADVISED THAT IN VIEW OF THE TREATMENT OF SWAPS IN THE HOUSE OF LORDS DECISION AS A SEPARATE AND DIVERSE ACTIVITY, DOUBT HAS BEEN CAST ON THE ABILITY
THE CORPORATION то ENTER INTO SWAP TRANSACTIONS UNDER ITS EXISTING STATUTORY CONSTITUTION, THE FINANCIAL SECRETARY SAID.
SUMMIONN
14
OF
LOGIC
OTHER
'FURTHERMORE, COUNSEL EXPRESSED CONCERN THAT, IF THE APPLIED BY THE HOUSE OF LORDS TO SWAPS WERE ALSO APPLIED то TYPES OF TRANSACTIONS, MANY OF THE HEDGING AND COLLATERAL TRANSACTIONS ROUTINELY ENTERED INTO BY THE CORPORATION TO SUPPORT ITS BORROWINGS COULD BE JEOPARDISED," SIR PIERS SAID.
/"AT PRESENT