XN000022-1991-11-19 — Page 7

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TUESDAY, NOVEMBER 19, 1991

**THERE IS NO STATUTORY BACKING TO HKAB'S SUPERVISORY POWERS OVER THE BROKERS, AND THERE ARE NO POWERS OF SANCTION," MR YAM SAID.

HE NOTED THAT HKAB HAS FOR THESE REASONS RECENTLY EXPRESSED CONCERN то THE GOVERNMENT OVER THE EFFECTIVENESS OF THE EXISTING ARRANGEMENTS, WITH A REQUEST THAT THE SUPERVISORY RESPONSIBILITY FOR BROKERS BE TAKEN OVER THE GOVERNMENT.

INVOLVED

"WE HAVE CONSIDERED THIS REQUEST CAREFULLY. THERE ARE ONLY 10 ACTIVE BROKERS IN HONG KONG. THEIR MAIN JOB IS TO OFFER BROKING SERVICES TO PARTICIPANTS OF THE INTERBANK MARKET AND ARE MAINLY IN FOREIGN EXCHANGE AND INTERBANK DEPOSIT TRANSACTIONS. SOLICIT BID AND OFFER PRICES FROM PRINCIPALS AND TRY TO PULL THE DEALS.

"AS

THEY

TOGETHER

SETTLEMENTS ARE MADE BETWEEN THE PRINCIPALS DIRECT, THERE ARE NO CREDIT OR SETTLEMENT RISKS INVOLVING THE BROKERS,*

中中 MR YAM SAID.

FURTHERMORE, THE EXECUTIVE COMMITTEE OF THE BROKER ASSOCIATION HAS THE POWERS TO MAKE RULES REGULATING THE CONDUCT OF ITS MEMBERS AND то ENFORCE THESE RULES. IT MAY CALL ON ANY MEMBER то PROVIDE ANY RELEVANT INFORMATION OR DOCUMENTS AND, IF NECESSARY, TO IMPOSE PENALTIES IN THE FORM OF A REPRIMAND OR SUSPENSION FROM MEMBERSHIP OR EVEN EXPULSION FROM THE ASSOCIATION.

"WITH THE CO-OPERATIONS OF THE BROKERS ASSOCIATION, I THINK THE EXISTING ARRANGEMENTS CAN CONTINUE ADEQUATELY TO SERVE THE NEEDS OF THE MARKET.

"I HOPE THE CO-OPERATION WILL CONTINUE TO BE FORTHCOMING. THE GOVERNMENT PREFERS A SELF-REGULATORY SYSTEM.

"THE ALTERNATIVE IS A FORMAL LICENSING AND SUPERVISORY SYSTEM WHICH WILL BE EXPENSIVE, AND SOMEBODY WILL HAVE TO BEAR THE COSTS. IN THIS CONNECTION, I AM ENCOURAGED TO SEE THAT THE BROKERS ASSOCIATION IS

NOW IN THE PROCESS OF DRAFTING A CODE OF CONDUCT FOR BROKERS, MR YAM SAID.

GOVT TO FUND APPLIED RESEARCH AND DEVELOPMENT SCHEME

* * * * * *

AN APPLIED RESEARCH AND DEVELOPMENT SCHEME WILL BE INTRODUCED NEXT YEAR UNDER WHICH THE GOVERNMENT IS HOPING ΤΟ PROVIDE $200 MILLION TO COMPANIES IN THE FORM OF AN INVESTMENT IN RESEARCH AND DEVELOPMENT (R AND D) PROJECTS, THE DIRECTOR-GENERAL OF INDUSTRY, MR T.H. BARMA, SAID YESTERDAY (MONDAY).

IN

IN A SPEECH ENTITLED "BUSINESS AND INVESTMENT OPPORTUNITIES HONG KONG" TO THE HONG KONG-ITALIAN SOCIETY IN MILAN, MR BARMA SAID THE HONG KONG GOVERNMENT SAW THE DEVELOPMENT OF A CAPABILITY AS CRUCIAL IF TECHNOLOGIES WERE GOING APPLIED IN HONG KONG'S OWN INDUSTRIAL ENVIRONMENT AND CIRCUMSTANCES.

LOCAL R AND D то BE USEFULLY

/HE SAID