XN000022-1983-02-02 — Page 3

WEDNESDAY, FEBRUARY 2, 1983

PROPOSAL TO CONTROL PAPER GOLD SCHEME ADVERTISING

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THE PROTECTION OF INVESTORS (AMENDMENT) BILL 1983 SEEKS TO APPLY SELECTIVE CONTROLS OVER THE ADVERTISING OF PAPER GOLD TRADING SCHEMES MAINLY AT THE RETAIL LEVEL TO REDUCE THE EXPOSURE OF THE PUBLIC TO UNSOUND SCHEMES, THE SECRETARY FOR ECONOMIC SERVICES, THE HON P. JACOBS, SAID IN THE LEGISLATIVE COUNCIL TODAY.

MR JACOBS EXPLAINED THAT SELECTIVE CONTROLS OVER ADVERTISING+ MEANS TWO THINGS:

FIRST, THE GOVERNMENT IS NOT SEEKING TO REGULATE JEWELLERY BUSINESSES IN THE SENSE OF EXERCISING PRUDENTIAL SUPERVISION OVER THEM. THEY AND ANY OTHER BUSINESS MAY CONTINUE OPERATING PAPER GOLD TRADING SCHEMES PROVIDED THAT THEY DO NOT SEEK TO ADVERTISE THEM.

SECOND, ANY BUSINESS WHICH OPERATES A PAPER GOLD TRADING SCHEME AND WISHES TO ADVERTISE IT MUST IN FUTURE OBTAIN THE PRIOR AUTHORISATION OF THE SECURITIES COMMISSION FOR THE ADVERTISING.

SUCH

IN THIS CONNECTION, WE ENVISAGE THAT APPLICATION MADE BY BUSINESSES THAT ARE ALREADY SUBJECT TO PRUDENTIAL SUPERVISION AS BANKS - AND THOSE WHICH PRACTISE A SUFFICIENT AND EFFECTIVE DEGREE OF SELF-REGULATION -- SUCH AS MEMBERS OF THE GOLD AND SILVER EXCHANGE WILL NORMALLY BE APPROVED.

+BUT APPLICATIONS MADE BY ANY OTHER BUSINESS WILL BE EXAMINED CAREFULLY BY THE COMMISSIONER FOR SECURITIES, WHO WILL HAVE TO SATISFY HIMSELF GENERALLY THAT THE DRAFT ADVERTISEMENT IS NOT AMBIGUOUS OR MISLEADING, THAT THE BUSINESS IS GENUINE, AND THAT THE PROMOTERS INTEND TO IMPLEMENT INTERNAL CONTROL SYSTEMS APPROPRIATE TO THE SCHEME IN QUESTION, MR JACOBS SAID.

HE POINTED OUT THAT THE BILL HAD BEEN DRAFTED TO ENABLE THE GOVERNOR IN COUNCIL TO SPECIFY ANY INVESTMENT ARRANGEMENTS PROVIDED THEY MEET WITH THE CRITERIA SET FORTH,

SO, WHILE IT WAS TRADING IN PAPER GOLD THAT PROMPTED THIS BILL, IT HAS BEEN DESIGNED IN SUCH A WAY THAT ITS PROVISIONS COULD BE EXTENDED TO OTHER COMMODITIES TRADED UNDER SIMILAR SCHEMES,+ HE EXPLAINED,

IN DESIGNING A MEASURE CONCERNED WITH CONSUMER PROTECTION, IT IS GENERALLY BEST TO INTERFERE AS LITTLE AS POSSIBLE WITH NORMAL TRADING PRACTICES AND TO AVOID CREATING UNNECESSARY RESTRAINTS ON TRADE, MR JACOBS STATED.

TRADING IN GOLD FUTURES, WHICH IS CONDUCTED ON THE COMMODITIES EXCHANGE. IS ALREADY SUBJECT TO PRUDENTIAL SUPERVISION BY THE COMMODITIES TRADING COMMISSION, HE POINTED OUT.

DEBATE ON THE BILL WAS ADJOURNED.

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