XN000022-1985-08-07 — Page 13

WEDNESDAY, AUGUST 7, 1985

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FACILITIES NEEDED TO MAINTAIN HONG KONG'S FINANCIAL ROLE

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TO MAINTAIN AND ENHANCE HONG KONG'S ROLE AS A MAJOR FINANCIAL CENTRE THE FULL RANGE OF FACILITIES NORMAL TO SUCH A SERVICE CENTRE MUST BE PROVIDED, THE HON W.C.L. BROWN SAID IN THE LEGISLATIVE COUNCIL TODAY (WEDNESDAY).

HE WAS SPEAKING DURING THE RESUMED DEBATE ON THE COMMODITIES TRADING (AMENDMENT) BILL WHICH HE SAID SOUGHT TO AMEND THE PRINCIPAL ORDINANCE FOR THREE MAIN REASONS: FIRST, TO FACILITATE THE REORGANISATION OF THE HONG KONG FUTURES EXCHANGE SECOND, TO ENABLE THE CONTROL EXERCISED BY THE COMMODITIES TRADING COMMISSION OVER COMMODITIES TO BE EXTENDED TO COVER TRADING IN FINANCIAL FUTURES- AND THIRD, TO REORGANISE THE HONG KONG FUTURES EXCHANGE'S COMPENSATION FUND IN ORDER TO AFFORD BETTER PROTECTION TO THE INVESTING PUBLIC.

MR BROWN SAID THE ROLE PLAYED BY FINANCIAL FUTURES IN HEDGING THE EVER-INCREASING RISKS OF DOING BUSINESS IN TODAY'S FINANCIAL MARKETS WAS AN IMPORTANT ONE.

+ IT IS ONE WE HAVE BEEN WITHOUT IN HONG KONG FOR TOO LONG, AND UNOFFICIAL MEMBERS - ON WHOSE BEHALF I SPEAK AS CONVENOR OF THE LEGCO MONETARY AFFAIRS GROUP - GENERALLY WELCOME THIS LEGISLATION WHICH WE BELIEVE WILL FURTHER DEVELOP AND STRENGTHEN HONG KONG'S POSITION.+

VARIOUS WEAKNESSES IN THE EXISTING COMPENSATION FUND PROVISIONS IN THE ORDINANCE HAD BEEN IDENTIFIED RECENTLY IN CONNECTION WITH THE SETTLEMENT OF CLAIMS.

THE NEW COMPENSATION FUND TO BE ESTABLISHED WITH THE PASSAGE OF THE BILL WOULD HELP TO REMOVE THESE DIFFICULTIES AND GIVE BETTER PROTECTION TO INVESTORS, AND THIS SHOULD BE WELCOMED BY THE PUBLIC.

*WHILE I FULLY SUPPORT THE BILL,+ MR BROWN SAID, +1 AND MY COLLEAGUES ARE NONETHELESS CONSCIOUS THAT THE HANG SENG INDEX FUTURES CONTRACT COULD ENCOURAGE UNDUE SPECULATION BY SMALL INVESTORS.

*WHILE SPECULATIVE ACTIVITY IS AN ESSENTIAL INGREDIENT OF THE FUTURES MARKETS, EXCESSIVE SPECULATION BY THOSE WHO CANNOT AFFORD TO LOSE MUST BE GUARDED AGAINST.

+THIS IS OF COURSE EASIER SAID THAN DONE, BUT I HOPE THE EXCHANGE ITSELF WILL SUBSCRIBE TO PUBLICITY SO THAT THE INVESTING PUBLIC IS MADE FULLY AWARE OF THE RISKS POSED BY PARTICIPATION IN THE NEW MARKETS ABOUT TO BE CREATED, HE SAID.

THE BILL WAS PASSED.

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