XN000022-1994-12-01 — Page 7

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Q: What is the Chinese side... to make sure it responds?

FS: I don't have that.

Q: What is the timing on mortgage securitisation?

FS: There is no timing on it. What's been happening of course is that it's been gradually occurring. There have been already some cases of mortgage securitisation. What I want to do is to ensure that we are looking very seriously at whether we need some guidelines, just to make sure that that development is in a sensible direction both from the consumers' point of view, and from the point of view of any effect on the property market. Those have been my two main interests. But this is an early stage. It's a new development for Hong Kong. We have to look, for instance, at what has happened in the US, what's been through, I would say, a very turbulent history in the US on that subject. So I am just signalling that we are looking at that rather carefully.

Q: On the issue of stock futures. Yesterday LegCo have passed a motion that government may not have full consultation on this. So is it a sound proof that the government may have overweight the factor of competition in the region but underweight...?

FS: Well I think in a way the debate is so far removed from the fact that it's quite difficult to give a rational answer to the question. I means the problem is, of course, the way. The questions are couched, or the way the motion was couched, don't actually reflect the reality. We have set up a very expert SFC, It didn't exist in the day when we had our previous problems, and it is them who assess whether the risk management measures which exist in the futures exchange in this case are adequate for this particular new product. They are happy that those measures are adequate. The government actually doesn't need to take any view on it whatsoever. It's not really for us to become experts on what will be good for the market. But we are happy that the SFC has the expertise to judge that. I think that many LegCo members made it clear yesterday their main criticism was that there wasn't enough consultation. That's not actually consultation by the government, that's consultation by the futures exchange in essence. But they also said that they will not seek to stand in the way of this subsidiary legislation which is going through, which is merely to enable SFC to impose some other risk control measures. So although I am disappointed at the result of the debate, I don't think there would actually be any slowing down in our progress towards that new product. Of course in parallel the Futures Commission is going through a consultation process, it's up to them in the SFC to judge whether any fine tuning is needed. That was the last question. Thank you very much.

end/Thursday, December 1, 1994