XN000022-1990-12-05 — Page 11

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RISKY TO ENTRUST MONEY IN UNREGULATED FOREIGN EXCHANGE COMPANIES: FS

IT IS NEVER SENSIBLE TO ENTRUST ONE'S MONEY IN THE HANDS OF PEOPLE WHO LACK A GOOD TRACK RECORD OF SAFEGUARDING THE INTERESTS OF THEIR CLIENTS, HOWEVER ATTRACTIVE THEIR SALES LITERATURE OR THE PROMISES THEY MAKE, THE FINANCIAL SECRETARY, THE HON SIR PIERS JACOBS, INFORMED THE LEGISLATIVE COUNCIL TODAY (WEDNESDAY).

IN A WRITTEN REPLY TO A QUESTION BY THE HON MICHAEL CHENG, SIR PIERS SAID THE GOVERNMENT WAS AWARE OF THE ACTIVITIES OF THOSE SO-CALLED FOREIGN EXCHANGE COMPANIES AND THE COMPLAINTS FROM INVESTORS WHO CLAIMED TO HAVE FALLEN VICTIM IN THEIR DEALINGS WITH THESE COMPANIES.

"WHILST I BELIEVE THAT INVESTORS HAVE A RESPONSIBILITY ΤΟ BR CAREFUL AND PRUDENT IN TAKING CARE OF THEIR OWN MONEY, I ACCEPT THAT THERE IS DOUBT AS TO WHETHER OR NOT SMALL INVESTORS ARE IN A POSITION TO ASSESS OBJECTIVELY ALL THE RISKS INVOLVED.

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INVESTORS' INABILITY

HE SAID HE WAS NOT SO MUCH WORRIED ABOUT TO ASSESS THE RISKS OF INVESTING IN LEVERAGED CONTRACTS IN FOREIGN EXCHANGE.

INABILITY ΤΟ ASSESS UNREGULATED FOREIGN THEIR BEHALF, THUS OF RIGGED TRADING AND

"WHAT IS OF MORE CONCERN TO ME IS THEIR THE RISKS OF GIVING FULL DISCRETION ΤΟ THESE EXCHANGE COMPANIES, PURPORTEDLY TO INVEST ON SUBJECTING THEMSELVES TO THE POSSIBILITY CHURNING BY SOME OF THESE COMPANIES.

SIR PIERS SAID AN INTERNAL WORKING GROUP IN THE MONETARY AFFAIRS BRANCH HAD BEEN LOOKING AT THE MATTER AND THREE OPTIONS COULD BE IDENTIFIED.

THE FIRST IS TO ALLOW THESE COMPANIES TO REGULATE THEMSELVES.

**

'IN VIEW OF THE NATURE AND THE RECORD OF COMPLAINTS, I CONSIDER THIS TO BE AN UNACCEPTABLE OPTION.

Pr

'ALTHOUGH SOME OF THESE COMPANIES HAVE TAKEN STEPS TO FORM THEMSELVES INTO ASSOCIATIONS, AND THERE HAS BEEN MUCH PUBLICITY ABOUT SUCH MATTERS AS THE DRAFTING OF CODES OF PRACTICE, WE HAVE YET TO BE CONVINCED THAT THESE DEVELOPMENTS WILL RESULT IN INVESTORS BEING PROVIDED WITH THE PROTECTION THEY NEED, HE SAID.

HAD

HE URGED INVESTORS TO NOTE THAT NONE OF THOSE ASSOCIATIONS BEEN RECOGNISED OR IN ANY WAY ACCEPTED BY THE GOVERNMENT AS A SELF-REGULATORY ORGANISATION,

THE SECOND OPTION IS TO CREATE A NEW AND COMPREHENSIVE REGULATORY SYSTEM FOR THIS TYPE OF ACTIVITY.

SIR PIERS SAID: SUCH A SYSTEM COULD INCLUDE A REGISTRATION PROCEDURE OPEN ONLY TO COMPANIES WHICH ARE CONSIDERED FIT AND PROPER BY A REGISTRATION AUTHORITY, AND THE REGISTRATION OF ACCOUNT EXECUTIVES AND MANAGERS OF DISCRETIONARY ACCOUNTS."

DIRECTORS,

/"THERE COULD