XN000022-1987-10-21 — Page 2

WEDNESDAY, OCTOBER 21, 1987

GENERAL COMMITTEE HAS POWER TO SUSPEND TRADING

THE GENERAL COMMITTEE OF THE HONG KONG STOCK EXCHANGE HAS THE OF THE POWER TO SUSPEND TRADING IN ACCORDANCE WITH THE TRADING RULES

IN EXCHANGE, THE FINANCIAL SECRETARY, THE HON PIERS JACOBS, SAID LEGISLATIVE COUNCIL TODAY WEDNESDAY).

THE

REPLYING TO A QUESTION BY THE HON MARTIN LEE, MR JACOBS SAID THE GOVERNMENT HAD BEEN INFORMED IN ADVANCE OF THE PROPOSED ACTION, WHICH IT REGARDED AS A SENSIBLE RESPONSE TO THE SITUATION,

MR JACOBS SAID: "THE DECISION TO SUSPEND TRADING WAS LARGELY DETERMINED BY THE CONSIDERABLE BACKLOG OF OUTSTANDING TRANSACTIONS WHICH REQUIRE TO BE SETTLED.

"THIS BACKLOG RESULTED FROM THE RECENT VERY HIGH LEVEL OF TURNOVER IN THE MARKET.

"IT IS IMPORTANT THAT BOOKS ARE PROPERLY SQUARED BEFORE TRADING 13 RESUMED PARTICULARLY AGAINST A BACKGROUND OF HIGHLY VOLATILE WORLD MARKETS.

H

"THE EXCHANGE CONSIDERS THAT IT WILL TAKE FOUR THE BACKLOG.

DAYS

TO CLEAR

HE ADDED THAT A SECONDARY BENEFIT OF THE SUSPENSION WAS THAT IT ALLOWED TIME FOR THE INITIAL OVER-REACTION TO EVENTS TO SUBSIDE.

MR

SAID JACOBS

THE QUESTION OF

BY THE INTERVENTION

STOCK COMMISSIONER FOR SECRUITIES DID NOT ARISE BECAUSE THE HONG KONG EXCHANGE TOOK THE INITIATIVE

SUSPENDING TRADING UNDER ITS OWN

RULES.

OF

BODIES "I THINK IT IS PREFERABLE FOR SELF REGULATORY

TO MAKE USE THE EXCHANGE

OF THEIR OWN POWERS WHERE THESE ARE

HE SAID. AVAILABLE INSTEAD OF RESORTING TO GOVERNMENT INTERVENTION,

SUCH AS

17

"THIS IS IN

WITH OUR GENERAL FINANCIAL MARKETS IN HONG KONG, HE ADDED.

LINE

PHILOSOPHY

TOWARDS

THE

H

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