XN000022-1987-11-04 — Page 5

WEDNESDAY, NOVEMBER 4, 1987

NERD FOR FUTURES MARKET CALLED INTO QUESTION

THE SENIOR MEMBER OF THE LEGISLATIVE COUNCIL, THE HON MISS LYDIA DUNN, TODAY (WEDNESDAY) WELCOMED THE GOVERNMENT'S DECISION TO APPOINT A COMMITTEE TO REVIEW THE STRUCTURE AND OPERATION OF HONG KONG'S STOCK AND FUTURES EXCHANGES.

"WE MUST NOW REVIEW THOSE STRUCTURES URGENTLY IF WB ARE ΤΟ RETAIN HONG KONG'S CREDIBILITY, SHR SAID WHEN LEADING OFF THE COUNCIL'S DEBATE ON THE GOVERNOR'S POLICY ADDRESS.

SHE REQUESTED THE GOVERNMENT TO CONSIDER QUESTION OF WHETHER HONG KONG NEEDED A STOCK INDEX AND IN WHAT WAY SUCH A "LICENSED CASINO" CONTRIBUTED ECONOMY.

THE FUNDAMENTAL FUTURES MARKET, TO HONG KONG'S

A

"IN A SMALL PLACE LIKE HONG KONG, IS IT POSSIBLE TO HAVE FUTURES MARKET WITHOUT RELYING UPON SPECULATORS TO PROVIDE A COUNTER PART TO THOSE WHO WANT TO HEDGE?" SHE ASKED.

MISS DUNN POINTED OUT THAT IN HER OPINION, THE SYSTEM LACKING IN "GOOD LAW" BUT IN "GOOD MANAGEMENT".

WAS NOT

BY THIS SHE MEANT THAT THERE WERE ADEQUATE POWERS TO SAFEGUARD THE PUBLIC INTEREST, BUT THE WILL то EXERCISE THOSE POWERS WAS WANTING.

MISS DUNN BELIEVED THERE WERE LESSONS TO BE LEARNT FROM THE RECENT EVENTS.

FIRST, THERE APPEARED ΤΟ HAVE BERN TOO MANY CONFLICTS OF INTEREST IN THOSE WHO TOOK ON THE RESPONSIBILITY OF RUNNING ORDERLY MARKETS.

"WHERE THE POACHERS AND GAMEKEEPERS ARE THE SAME PERSONS, SELF REGULATION CAN FAIL, ESPECIALLY WHERE THE STAKES ARE HIGH,' SHE SAID.

SECOND, THE GOVERNMENT AND ITS WATCHDOGS, THE SECURITIES COMMISSION AND THE COMMODITIES TRADING COMMISSION, WHICH HAD THE DUTY TO SUPERVISE THE MARKETS AND SAFEGUARD THE INTEREST OF GENUINE INVESTORS, MUST HAVE KNOWN FOR A LONG TIME THAT THE RAPID GROWTH IN THE VOLUME OF TRADING, PARTICULARLY IN THE FUTURES MARKET, HAD OVERSTRETCHED THE STRUCTURE ON WHICH THOSE MARKETS DEPENDED.

"WHY DID THE GOVERNMENT AND ITS WATCHDOGS NOT ACT? DID THEY NOT SEE THE NEED TO ACT? OR DID THEY LACK THE WILL TO ACT?" SHE ASKED.

MISS DUNN STRESSED THE NEED FOR AN EFFECTIVE SYSTEM OF CHECKS AND BALANCES IN A FAIR MARKET.

WHAT WE