XN000022-1994-11-30 — Page 27

WEDNESDAY, NOVEMBER 30, 1994.

AS I HAVE ALREADY POINTED OUT, THE IMPORTANT POINT IS THAT THE FUTURES EXCHANGE HAS NOT YET INTRODUCED THE PRODUCT. IT IS DISCUSSING THE DETAILS WITH THE STOCK EXCHANGE AND IS GAUGING THE VIEWS OF PROFESSIONAL BODIES ON THE MATTER. THE FUTURES EXCHANGE WILL TAKE INTO ACCOUNT THE VIEWS OF THE MARKET BEFORE FIRMING UP THE DETAILS OF THE PRODUCT.

OF

THE AND

SOME HAVE URGED THAT THE INTRODUCTION OF THE PRODUCT SHOULD

BE DEFERRED PENDING THE OUTCOME OF THE FUTURES EXCHANGE'S DISCUSSION WITH THE PROFESSIONAL BODIES. AS I SAID, THE PRODUCT HAS NOT YET BEEN INTRODUCED, AND THE FUTURES EXCHANGE WILL NOT INTRODUCE IT UNTIL IT HAS COMPLETED ITS CONSULTATION AND TAKEN INTO ACCOUNT THE COMMENTS THE MARKET. ONLY THEN WILL IT FINALISE THE DATE FOR LAUNCHING PRODUCT. HOWEVER, FROM THE POINT OF VIEW OF MARKET DEVELOPMENT THE NEED TO MAINTAIN HONG KONG'S COMPETITIVE EDGE, THE ADMINISTRATION'S VIEW IS THAT THE EXCHANGE SHOULD INTRODUCE THE PRODUCT AS SOON AS POSSIBLE, CONSISTENT WITH ITS COMMITMENT TO CONSULT AND WITH THE SATISFACTION OF THE SFC. SO FAR, HOWEVER, THE SFC HAS EXPRESSED NO REGULATORY CONCERN THAT WOULD JUSTIFY FURTHER DELAY,

MR PRESIDENT, DR THE HONOURABLE PHILIP WONG EXPRESSED THE OPINION THAT WE SHOULD LEAVE IT TO OTHER MARKETS TO TRADE SUCH RIGH RISK PRODUCTS. THIS ARGUMENT IS BASED ON THE MISGUIDED ASSUMPTION THAT THE PRODUCT IS BOUND TO CREATE A PROBLEM FOR THE LOCAL MARKET. IT SHOULD BE CLEAR FROM ALL THAT I HAVE SAID 80 FAR THAT SUCH "PERCEIVED THREATS" ARE NOT SUPPORTED BY ANY OBJECTIVE AND RATIONAL CONSIDERATION OF THE CASE.

IN ANY EVENT, DERIVATIVE PRODUCT DEVELOPMENT IS A GLOBAL PHENOMENON. TO ALLOW SUCH POTENTIAL LOCAL BUSINESS TO DRIFT OFF-SHORE SIMPLY RUNS CONTRARY то OUR POLICY OF MAINTAINING THE GENERAL COMPETITIVENESS OF OUR MARKET AND THE STATUS OF HONG KONG AS AN INTERNATIONAL FINANCIAL CENTRE VIS-'-VIS OTHER MARKETS KEEN TO ENHANCE THEIR OWN ATTRACTIVENESS TO INTERNATIONAL INVESTORS.

MR PRESIDENT, IT 18 CLEAR FROM ALL THE FOREGOING THAT WHATEVER THE MERITS AND DEMERITS OF STOCK FUTURES, THE WORDING OF THIS MOTION IS MISPLACED AND INAPPROPRIATE. TO CARRY THE MOTION WOULD SEND AN UNFORTUNATE MESSAGE TO THE MARKET THAT THE LEGISLATURE BELIEVES THAT THE GOVERNMENT SHOULD INTERVENE IN MARKET DEVELOPMENT EVEN IF THE REGULATOR IS SATISFIED WITH THE RISK MANAGEMENT AND INVESTOR PROTECTION ASPECTS. THE SUCCESS OF HONG KONG AS ONE OF THE MOST IMPORTANT CAPITAL MARKETS IN THE WORLD HAS BEEN BUILT ON, AMONG OTHER THINGS, OUR POLICY OF FREE MARKET OPERATION WITH THE MINIMUM INTERVENTION FROM GOVERNMENT. THIS POLICY HAS SERVED HONG KONG WELL. THERE IS NO REASON TO ABANDON THIS POLICY, AS WOULD BE 1MPLIED 1F MEMBERS WERE TO SUPPORT THE MOTION AND TAKE STEPS TO SUBJECT MARKET OPERATION AND DEVELOPMENT ISSUEN TO GOVERNMENT INTERVENTION, THUS STIFLING ANY MARKET INITIATIVES.

IN

MEMBERS

THE CIRCUMSTANCES, MR PRESIDENT, THE ADMINISTRATION IS NOT IN A POSITION TO SUPPORT THE MOTION. I WOULD URGE HONOURABLE TO JOIN THE OFFICIAL MEMBERS IN VOTING AGAINST IT.

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