XN000022-1994-11-30 — Page 22

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WEDNESDAY, NOVEMBER 30, 1994

MOTION DEBATE ON STOCK FUTURES CONTRACT

FOLLOWING IS THE SPEECH BY THE SECRETARY FOR SERVICES, MR MICHAEL CARTLAND, IN THE MOTION DEBATE ON STOCK CONTRACT IN THE LEGISLATIVE COUNCIL TODAY (WEDNESDAY):

FINANCIAL FUTURES

MR PRESIDENT,

LET ME SET THE RECORD STRAIGHT FROM THE OUTSET ON THE WORDING OF THIS MOTION. IT IS INACCURATE AND WIDE OF THE MARK IN ALMOST EVERY MATERIAL RESPECT. THE GOVERNMENT IS NOT INVOLVED, AS THIS MOTION SUGGESTS, IN DECIDING ON THE INTRODUCTION OF NEW PRODUCTS TO THE EXCHANGES. AS LONG AS NEW PRODUCTS MEET THE APPROPRIATE STATUTORY DEFINITIONS, QUESTIONS OF WHETHER TO HAVE THEM, WHAT THEY SHOULD BE AND WHEN AND HOW TO INTRODUCE THEM ARE ENTIRELY MATTERS WITHIN THE DISCRETION OF THE RESPECTIVE EXCHANGES, SUBJECT ONLY TO THE APPROVAL OF THE SECURITIES AND FUTURES COMMISSION AS TO THE REGULATORY AND RISK MANAGEMENT ARRANGEMENTS.

IT IS QUITE WRONG THEREFORE TO SUGGEST THAT IT IS GOVERNMENT'S DECISION AS TO WHETHER OR NOT THIS PRODUCT SHOULD BE INTRODUCED. IT IS NOT. INDEED THE PRODUCT HAS NOT YET BEEN INTRODUCED AT ALL. THE FUTURES EXCHANGE HAS ANNOUNCED THE PRODUCT BUT DOES NOT INTEND ΤΟ INTRODUCE IT UNTIL AFTER THE COMPLETION OF THE CONSULTATION EXERCISE ON WHICH IT HAS NOW EMBARKED. AT THE TIME THIS MOTION WAS PUT DOWN, THEREFORE, THE SUGGESTION THAT THERE HAD NOT BEEN FULL CONSULTATION WAS PREMATURE. A NUMBER OF HONOURABLE MEMBERS HAVE TODAY LAID EMPHASIS ON THE DESIRABILITY OF CONSULTATION. I AM GLAD THEREFORE THAT THE FUTURES EXCHANGE IS CONDUCTING A THOROUGH EXERCISE AND WILL CAREFULLY ASSESS THE COMMENTS AND REACTIONS BEFORE FINALISING THE DETAILS AND INTRODUCING THE PRODUCT. WHATEVER THE FORMAL REQUIREMENTS, IT IS ALWAYS WISE TO PREPARE THE GROUND CAREFULLY BEFORE PROCEEDING WITH MATTERS OF THIS NATURE AND IT IS ALWAYS POSSIBLE AFTER THE EVENT TO CONCLUDE THAT MATTERS COULD HAVE BEEN HANDLED BETTER. IT WOULD CLEARLY BE WRONG, HOWEVER, TO ADOPT A MOTION CONDEMNING GOVERNMENT FOR INTRODUCING A PRODUCT ON THE FUTURES EXCHANGE WITHOUT CONSULTATION, AT A TIME WHEN THE RESPONSIBLE BODY, THE EXCHANGE AND NOT THE GOVERNMENT, WAS ACTUALLY CONDUCTING SUCH CONSULTATION PRIOR TO INTRODUCTION OF ITS PRODUCT.

/A FURTHER