XN000022-1976-06-18 — Page 2

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FRIDAY, JUNE 18, 1976

COMMODITIES TRADING BILL 1976 ******

THE GOVERNMENT TODAY PUBLISHED A BILL WHICH AIMS TO PERMIT THE ESTABLISHMENT OF A COMMODITY EXCHANGE IN HONG KONG AS WELL AS TO CONTROL TRADING IN COMMODITY FUTURES CONTRACTS. THE BILL, KNOWN AS THE COMMODITIES TRADING BILL 1976, ALSO PROVIDES THE COMPULSORY REGISTRATION OF COMMODITY DEALERS AND THEIR REPRESENTATIVES AS WELL AS COMMODITY TRADING ADVISERS.

A GOVERNMENT SPOKESMAN RECALLED THAT IN 1973 THE LEGISLATIVE COUNCIL PASSED THE COMMODITY EXCHANGES (PROHIBITION) BILL, THE OBJECT OF WHICH WAS TO PROHIBIT THE ESTABLISHMENT OF ANY NEW EXCHANGE DEALING IN COMMODITY FUTURES. THE INTENTION WAS THAT THE WHOLE QUESTION OF THE ESTABLISHMENT OF A COMMODITY EXCHANGE SHOULD BE SUBJECT TO A DETAILED EXAMINATION SO AS TO ENSURE THAT ANY EXCHANGE PERMITTED TO BE ESTABLISHED IN HONG KONG WOULD BE PROPERLY REGULATED AND WOULD CONFORM TO THE HIGHEST INTERNATIONAL STANDARDS.

ON AUGUST 13, 1975 THE LEGISLATIVE COUNCIL APPROVED IN PRINCIPLE THE ESTABLISHMENT OF A COMMODITY EXCHANGE IN HONG KONG PROVIDED THAT LEGISLATIVE MEASURES COULD BE MADE AND ENFORCED EFFECTIVELY WITH PARTICULAR NEED TO MINIMISE SOCIAL HAZARDS TO THE ORDINARY CITIZENS OF HONG KONG.

THE SPOKESMAN SAID THAT ALTHOUGH MUCH TIME AND THOUGHT HAD GONE INTO THE PREPARATION OF THE BILL WHICH SOUGHT TO EMBODY THE BEST PRACTICES AND STATUTORY PROVISIONS GOVERNING OTHER MARKETS, THE BILL HAD BEEN DRAFTED WITH HONG KONG'S NEEDS SPECIFICALLY IN MIND.

THE MAIN PROVISIONS OF THE BILL RELATE TO THE ESTABLISHMENT OF A COMMODITIES TRADING COMMISSION AND A COMMISSIONER FOR COMMODITIES TRADING THE LICENSING OF THE COMMODITY EXCHANGE- THE COMPULSORY REGISTRATION OF DEALERS- THE ESTABLISHMENT OF A COMPENSATION FUND RESTRICTIONS IN TRADING IN COMMODITY FUTURES AND IMPROPER TRADING PRACTICES.

COMMODITIES TRADING COMMISSION AND COMMISSIONER FOR COMMODITIES

TRADING

IT IS PROPOSED THAT THE PRESENT SECURITIES COMMISSION WILL ASSUME THE RESPONSIBILITIES OF THE COMMODITIES TRADING COMMISSION AND WILL CONSIST OF THE SAME SEVEN PERSONS, THE COMMISSIONER FOR.. SECURITIES WILL ALSO BE THE COMMISSIONER FOR COMMODITIES TRADING. THE COMMISSION WILL ADVISE THE FINANCIAL SECRETARY ON ALL MATTERS RELATING TO TRADING IN COMMODITY FUTURES CONTRACTS SO AS TO ENSURE THAT ALL LEGISLATION RELATING TO SUCH TRADING IS COMPLIED WITH. IT WILL ALSO SUPERVISE THE ACTIVITIES OF THE HONG KONG COMMODITY EXCHANGE AND GENERALLY TAKE ALL REASONABLE STEPS TO PROTECT THE INTERESTS OF THOSE TRADING AND DEALING IN COMMODITY FUTURES CONTRACTS.

/COMMODITY