TUESDAY, NOVEMBER 19, 1991
OTHER MEMBERS WILL BE SIX REPRESENTATIVES NOMINATED BY THE HONG KONG ASSOCIATION OF BANKS (HKAB); TWO REPRESENTATIVES NOMINATED BY THE HONG KONG DEPOSIT-TAKING COMPANIES ASSOCIATION, THREE REPRESENTATIVES NOMINATED BY THE HONG KONG FOREIGN EXCHANGE AND DEPOSIT BROKERS' ASSOCIATION, ONE REPRESENTATIVES NOMINATED BY THE FOREX ASSOCIATION ONE REPRESENTATIVE NOMINATED BY THE HONG KONG SOCIETY OF ACCOUNTANTS.
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AM SURE THE ASSOCIATIONS CONCERNED WILL LEND THEIR SUPPORT TO THE COMMITTEE IN THE OVERALL INTEREST OF UPHOLDING THE INTEGRITY OF THE MARKET, HE SAID.
UP
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"THE COMMISSIONER OF BANKING WILL OF COURSE BE PREPARED TO BACK THE COMMITTER'S RECOMMENDATIONS BY TAKING WHATEVER ACTION HE CONSIDERS APPROPRIATE IN RESPECT OF AUTHORISED INSTITUTIONS UNDER THE BANKING ORDINANCE, MR YAM SAID.
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MR YAM WILL SHORTLY BE WRITING FORMALLY TO THE ASSOCIATIONS REPRESENTED ABOUT THE PROPOSAL AND INVITE THEM ΤΟ NOMINATE REPRESENTATIVES TO SIT ON THE COMMITTEE.
HE NOTED THAT THE IMPORTANCE OF MAINTAINING MARKET INTEGRITY IS WELL UNDERSTOOD.
MOST PARTICIPANTS IN THE FOREIGN EXCHANGE MARKET ACTING AS PRINCIPALS HAVE WELL ESTABLISHED SYSTEMS FOR INTERNAL CONTROL AND ASSESSMENT OF COUNTERPART RISKS, HE SAID.
"THE COMMISSIONER OF BANKING, AS SUPERVISOR FOR AUTHORISED INSTITUTIONS UNDER THE BANKING ORDINANCE, ALSO HAS AN INTEREST IN SUPERVISING THE EXCHANGE RISKS OF AUTHORISED INSTITUTIONS AND HAS, IN THIS CONNECTION, AGREED WITH THE INSTITUTIONS INDIVIDUALLY PRUDENTIAL LIMITS FOR THEIR OPEN POSITIONS.
"HE HAS ALSO LAID DOWN CODES OF CONDUCT TO BE OBSERVED BY EMPLOYEES OF AUTHORISED INSTITUTIONS INCLUDING THEIR DEALERS.
"THESE SEEMS TO BE QUITE ADEQUATE, AS FAR AS AUTHORISED INSTITUTIONS ARE CONCERNED," MR YAM SAID.
IN THE CASE OF THE INTERMEDIARIES, THAT IS THE FOREIGN EXCHANGE BROKERS, THEY ARE CURRENTLY NOT SUBJECT TO ANY FORM OF SUPERVISION BY THE GOVERNMENT.
"BUT THERE IS AN INTERESTING RELATIONSHIP BETWEEN THEM AND THE НКАВ, WHICH PUT A MORAL OBLIGATION ON HKAB TO PLAY THE ROLE AS
SUPERVISOR.
"THERE ARE TWO INTERLOCKING ELEMENTS WHICH CONTRIBUTE то BUILDING THAT RELATIONSHIP. ON THE ONE HAND, UNDER THE GENERAL RULE OF НКАВ, MEMBERS OF THE ASSOCIATION ARE NOT ALLOWED TO DEAL WITH ANY BROKING ENTITIES OTHER THAN MEMBERS OF THE HONG KONG FOREIGN EXCHANGE AND DEPOSIT BROKERS ASSOCIATION.
"ON THE OTHER HAND, UNDER THE CONSTITUTION OF THE BROKERS ASSOCIATION, ALL CHANGES IN ITS MEMBERSHIPS OR IN THE SHAREHOLDERS AND DIRECTORS OF ANY OF ITS MEMBERS ARE SUBJECT TO THE APPROVAL OF THE НКАВ.
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