XN000022-1976-06-23 — Page 6

WEDNESDAY, JUNE 23, 1976

UN

5

COMMODITY EXCHANGE TO ADD A FURTHER DIMENSION TO H.K. ECONOMY

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THE FINANCIAL SECRETARY THE HON. PHILIP HADDON-CAVE SAYS IT IS THE GOVERNMENT'S VIEW THAT THE OPERATION OF A WELL REGULATED COMMODITY EXCHANGE WILL ADD A FURTHER DIMENSION TO HONG KONG'S ECONOMY AND ITS INTERNATIONAL PROFILE.

MOVING THE SECOND READING OF THE COMMODITIES (TRADING) BILL 1976 IN THE LEGISLATIVE COUNCIL TODAY, MR. HADDON-CAVE SAID THE GOVERNMENT SOUGHT IN THE BILL, ONLY TO LAY DOWN THE BASIC RULES WITHIN WHICH THE COMMODITY MARKET MUST WORK IF IT WAS TO BE FAIR TO ALL PARTICIPANTS.

HE NOTED THAT THE BILL, TO BE SUPPLEMENTED BY REGULATIONS AND BY RULES OF THE EXCHANGE COMPANY, ACHIEVED THE AIM OF BALANCING THE FREEDOM WITH AN ADEQUATE DEGREE OF REGULATION.

+BUT, TO BE ON THE SAFE SIDE,+ MR. HADDON-CAVE SAID, THE GOVERNMENT HAS RETAINED TO ITSELF CERTAIN POWERS WHICH IT WILL INVOKE IF AND WHEN IT IS SEEN THAT THE MARKET ITSELF IS NOT BEHAVING, OR HAS NOT BEHAVED, IN A RATIONAL AND ORDERLY MANNER,

+1 VERY MUCH DOUBT, HOWEVER, WHETHER THE GOVERNMENT WILL EVER NEED TO HAVE RECOURSE TO THESE POWERS IN THE CASE OF THE HONG KONG COMMODITY EXCHANGE, HE ADDED.

MR. HADDON-CAVE NOTED THAT IT WAS NOT EASY TO DEVISE ABSOLUTE AND FOOLPROOF SAFEGUARDS, EITHER ADMINISTRATIVE OR LEGISLATIVE, AGAINST SPECULATION AND POSSIBLE LOSS BY THOSE WITH LESS THAN ADEQUATE MEANS, WHILST ENSURING THAT THE MARKET CONCERNED CONTINUED TO OPERATE SMOOTHLY AND ADEQUATELY REFLECTED THE FORCES OF SUPPLY AND DEMAND.

BUT HE ASSURED THAT THE PROVISIONS IN THE BILL AND THE ARRANGEMENTS FOR THE OPERATION OF THE EXCHANGE WOULD, AS A GENERAL RULE, EFFECTIVELY EXCLUDE THE SMALL INVESTORS.

+THE BILL ENSHRINES IN THE LAW CONTROLS WHICH HAVE BEEN BUILT UP IN OLDER COMMODITY MARKETS, SUCH AS LONDON AND NEW YORK, BY CONVENTION AS WELL AS BY STATUTE.

+BUT THE BILL HAS ALSO BEEN DRAFTED WITH HONG KONG'S NEEDS SPECIFICALLY IN MIND AND, IN AT LEAST TWO RESPECTS, IS UNIQUE IN CONTAINING PROVISIONS WHICH ARE NOT REQUIRED IN ANY OTHER COMMODITY MARKET, HE SAID.

THE MOST IMPORTANT PROVISIONS OF THE BILL, ACCORDING TO THE FINANCIAL SECRETARY, ARE IN PART II WHICH DEALS WITH THE ESTABLISHMENT OF A COMMODITIES TRADING COMMISSION AND A COMMISSIONER FOR COMMODITIES TRADING.

/THESE WILL