XN000022-1974-10-04 — Page 2

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FRIDAY, OCTOBER 4, 1974

ESTABLISHMENT OF COMMODITY EXCHANGE CONSIDERED

THE GOVERNMENT IS CONTINUING ACTIVELY TO EXPLORE THE POSSIBILITY OF ESTABLISHING A COMMODITY EXCHANGE IN HONG KONG.

THIS WAS ANNOUNCED TODAY BY THE ACTING FINANCIAL SECRETARY, MR. DEREK JONES, SPEAKING IN HIS CAPACITY AS CHAIRMAN OF THE STEERING GROUP ON COMMODITY EXCHANGES.

HE SAID THAT FOLLOWING A DETAILED EXAMINATION OF THE PROPOSALS SUBMITTED IN THE EARLY SUMMER OF THIS YEAR BY THE SIX GROUPS SEEKING TO SET UP A COMMODITY EXCHANGE IN HONG KONG, THE GOVERNMENT HAD DECIDED TO BEGIN FURTHER NEGOTIATIONS WITH ONE PARTICULAR CONSORTIUM,

THIS CONSORTIUM COMPRISES REPRESENTATIVES OF THE WHEELOCK MARDEN GROUP, THE CHINA ENGINEERS GROUP, THE WOO HON FAI GROUP AND RUDOLF WOLFF AND CO., AND CO-ORDINATED BY GENERAL MANAGEMENT CH.K.) LTD.

+ IT IS ENVISAGED THAT THE GUARANTEE ING AND CLEARING OF ALL CONTRACTS ON THE PROPOSED EXCHANGE WOULD BE CARRIED OUT BY A CLEARING HOUSE ESTABLISHED IN HONG KONG SOLELY FOR THIS PURPOSE,+ MR. JONES SAID.

HE STRESSED THAT THE GOVERNMENT WOULD NOT COMMIT ITSELF FIRMLY TO THE ESTABLISHMENT OF AN EXCHANGE UNTIL IT WAS SATISFIED THAT ADEQUATE REGULATIONS HAD BEEN DRAUN UP TO ELIMINATE THE POSSIBILITY OF A COMMODITY EXCHANGE BEING USED AS A VEHICLE FOR EXCESSIVE SPECULATION BY THOSE INEXPERIENCED IN TRADING ON COMMODITY MARKETS.

HE POINTED OUT, HOWEVER, THAT PROVIDED THIS ESSENTIAL CONDITION COULD BE MET, THE GOVERNMENT WOULD ACCEPT THE ESTABLISHMENT OF A COMMODITY EXCHANGE IN HONG KONG WHICH KET THE HIGHEST INTERNATIONAL PROFESSIONAL STANDARDS,+ AS THIS COULD ONLY SERVE TO ENHANCE HONG KONG'S STATUS AS A LEADING FINANCIAL CENTRE IN THE REGION, AND THUS TO BENEFIT ITS ECONOMY AS A WHOLE.+

MR. JONES RECALLED THAT LAST SUMMER, THE LEGISLATIVE COUNCIL ENACTED THE COMMODITY EXCHANGES (PROHIBITION) ORDINANCE AND THIS WAS DESIGNED TO PROHIBIT THE ESTABLISHMENT OF EXCHANGES DEALING IN COMMODITY FUTURES WHICH COULD HAVE BEEN DETRIMENTAL TO THE PUBLIC INTEREST.

+THE PASSING OF THIS ORDINANCE PROVIDED TIME FOR THE GOVERNMENT TO STUDY THE WHOLE QUESTION IN GREATER DETAIL TO ENSURE THAT ANY EXCHANGE PERMITTED TO ESTABLISH ITSELF IN HONG KONG WOULD BE PROPERLY REGULATED AND WOULD OPERATE TO THE HIGHEST INTERNATIONAL STANDARDS.

+THE GOVERNMENT, THROUGH THE COMMISSIONER FOR SECURITIES AND HIS STAFF, NOW INTENDS TO UNDERTAKE DETAILED DISCUSSIONS WITH GENERAL MANAGEMENT CH.K.) LTD. PROVIDED THESE ARE SUCCESSFUL, A BILL WILL BE INTRODUCED TO AMEND THE COMMODITY EXCHANGES (PROHIBITION) ORDINANCE TO PERMIT THE ESTABLISHMENT OF ONE COMMODITY EXCHANGE TO DEAL IN CERTAIN SPECIFIED COMMODITIES,+ MR. JONES ADDED.

HE WENT ON: +IF THESE NEGOTIATIONS ARE SUCCESSFUL AND THE GOVERNMENT CAN BE ASSURED THAT THE EXCHANGE SHOULD BE OF BENEFIT TO HONG KONG, DETAILED PROPOSALS WILL THEN BE SUBMITTED TO THE GO VERNOR IN COUNCIL FOR THEIR CONSIDERATION AND APPROVAL.+