XN000022-1988-12-02 — Page 4

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FRIDAY, DECEMBER 2, 1988

ON THE FUNDING OF THE NEW COMMISSION, MR NENDICK SAID AT THIS STAGE THE GOVERNMENT ENVISAGED THREE SOURCES OF FINANCE FOR THE COMMISSION AN ANNUAL GRANT FROM GOVERNMENT (SUBJECT TO FINANCE COMMITTER'S APPROVAL), FEES AND CHARGES FOR PARTICULAR SERVICES WHICH THE COMMISSION WOULD PROVIDE AND A LEVY ON TRANSACTIONS.

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"TO PUT IT IN CONTEXT," HE SAID, "THE LEVY WE ARE LIKELY TO BE LOOKING FOR INVESTORS TO BEAR WILL BE CONSIDERABLY LESS THAN THE LEVY WHICH THE STOCK EXCHANGE CURRENTLY IMPOSES ON TRANSACTIONS.

HE ADDED THAT TO ENHANCE THE PUBLIC ACCOUNTABILITY OF THE COMMISSION, THE DIRECTOR OF AUDIT WOULD HAVE ACCESS TO ITS BOOKS WHEN HE SO REQUIRED AND ITS ANNUAL BUDGET WOULD NEED TO BE APPROVED BY THE GOVERNOR.

"THE COMMISSION WILL ALSO HAVE TO SUBMIT AN ANNUAL REPORT AND THIS WILL BE TABLED AT THE LEGISLATIVE COUNCIL, HE POINTED OUT.

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TURNING TO THE FUTURES EXCHANGE, MR NENDICK SAID THE EXCHANGE WOULD SHORTLY BE PUTTING FORWARD TO ITS MEMBERS PROPOSALS TO REFORM ITS CONSTITUTION.

"IF THESE ARE ACCEPTED," HE SAID, "A RECONSTITUTED BOARD OF DIRECTORS OF THE HONG KONG FUTURES EXCHANGE WILL BE IN OFFICE EARLY NEXT YEAR,"

THE FUTURES EXCHANGE IS ALSO IN AN ADVANCED STAGE OF IMPLEMENTING A NEW CLEARING AND RISK MANAGEMENT SYSTEM IN LINE WITH THE RECOMMENDATION OF THE SECURITIES REVIEW COMMITTEE, HE ADDED.

"IT MAY BE NOTED THAT THE GOVERNMENT HAS LEFT THE INITIATIVE

FOR THIS TO THE FUTURES EXCHANGE ITSELF.

"I SEE THIS AS RIGHT AND PROPER, FOR A FUTURES MARKET ONLY CONTINUE IN HONG KONG IF THERE ARE THOSE PREPARED OVER

TERM TO COMMIT CAPITAL TO THE MARKET ADEQUATE TO SUPPORT INVOLVED, HE SAID.

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MR NENDICK ALSO GAVE AN UPDATE ON THE IMPLEMENTATION RECOMMENDATIONS IN THE SECURITIES REVIEW COMMITTEE THE RECONSTITUTION OF THE STOCK EXCHANGE AND THE PROGRESS ON THE ESTABLISHMENT OF A NEW CENTRAL CLEARING AND SETTLEMENT SYSTEM TO REPLACE THE EXISTING ONE FOR STOCK TRANSACTIONS.

HE SAID HONG KONG HAD TAKEN SOME MAJOR STEPS TOWARDS ADDRESSING THE WEAKNESSES IN THE REGULATORY FRAMEWORK AND MARKET. STRUCTURES OF ITS SECURITIES AND FUTURES MARKETS IN LITTLE OVER A. YEAR AFTER THE WORLDWIDE STOCK MARKET CRASH.

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