XN000022-1988-07-12 — Page 3

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TUESDAY, JULY 12, 1988

THE SFC WILL BE:

GOVERNED BY A SMALL BOARD WITH AN EQUAL NUMBER OF EXECUTIVE AND NON-EXECUTIVE DIRECTORS TO BE APPOINTED BY THE GOVERNOR;

SUPPORTED BY A GOVERNMENT-APPOINTED ADVISORY COMMITTEE COMPRISING MARKET EXPERTS AND CHAIRED BY THE CHAIRMAN

THE COMMISSION;

OF

FUNDED LARGELY BY THE MARKETS IN THE FORM OF A TRANSACTION LEVY, FEES AND CHARGES, BUT PARTLY ALSO BY THE GOVERNMENT.

WE ARE AWARE BOTH OF THE NEED FOR ADEQUATE CHECKS AND BALANCES IN THE CONSTITUTION OF THE COMMISSION AND FOR A FAIR APPORTIONMENT OF COSTS BETWEEN MARKET USERS AND THE ORDINARY TAX PAYER. THESE FACTORS WILL BE TAKEN INTO ACCOUNT AS WE DRAFT THE NECESSARY LEGISLATION AND DRAW UP DETAILED FUNDING ARRANGEMENTS.

WE HAVE APPOINTED A CONSULTANT FROM THE UK TO HELP US

ARRIVING ESTABLISH THE COMMISSION. HE WILL BE

SHORTLY. WE

ΤΟ PLAN OF THE COMMISSION INTO THE INTRODUCE A BILL FOR THE ESTABLISHMENT

OF HAVING LEGISLATIVE COUNCIL EARLY IN THE NEXT SESSION WITH THE AIM THE NEW COMMISSION IN PLACE AT THE BEGINNING OF 1989.

ITS

AS YOU KNOW, THE STOCK EXCHANGE OF HONG KONG HAS INITIATED OWN EFFORTS TO REFORM ITS CONSTITUTION TO CREATE A MORE BROADLY BASED PUT AND PROPERLY REPRESENTED GOVERNING COUNCIL. THE PROPOSALS WILL BE TO AN EXTRAORDINARY GENERAL MEETING ON JULY 20. THE GOVERNMENT WELCOMES THIS INITIATIVE AND WISHES THE EXCHANGE EVERY SUCCESS IN ITS ENDEAVOUR SO THAT WE COULD HAVE THE NEW COUNCIL IN PLACE BY OCTOBER.

REFORM

LINE

EFFORTS

SRC CLEARING MANAGEMENT WOULD BE

THE HONG KONG FUTURES EXCHANGE HAS STARTED ITS OWN PLANS TO

ITS CONSTITUTION TO BRING IT IN

THE WITH RECOMMENDATIONS. IT HAS ALSO INITIATED NEGOTIATION WITH ITS HOUSE AND THE GUARANTEE CORPORATION IN CREATING A NEW RISK STRUCTURE AS RECOMMENDED BY THE SRC. WE HOPE THESE SUCCESSFUL WITH THE NEW STRUCTURE IN PLACE SOON.

THE GOVERNMENT IS FULLY COMMITTED TO IMPROVING AND OPERATION OF THE SECURITIES AND FUTURES INDUSTRY WHICH [S IMPORTANT TO HONG KONG'S DEVELOPMENT AS A MAJOR REGIONAL CAPITAL MARKET AND AN INTERNATIONAL FINANCIAL CENTRE. THE TWO EXCHANGES AND INTERESTED BODIES, SPEED TO BRING ABOUT THE VARIOUS REFORMS.

THE REGULATION

IN

WE

WILL

CONSULTATION WITH PROCEED W1T1 TOP

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