XN000022-1995-01-18 — Page 34

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Two bills on SFC's investigatory powers

Following is the speech by the Secretary for Financial Services, Mr Michael Cartland, in the resumed second reading debate on the Securities and Futures Commission (Amendment) (No.2) Bill 1994 and the Leveraged Foreign Exchange Trading (Amendment) Bill 1994 in the Legislative Council today (Wednesday):

Mr President,

I am most grateful to the Honourable Peter Wong and other Members of the Bills Committee for the careful consideration given to the two Bills. The Bills aim at providing the legal basis for the Securities and Futures Commission (SFC) to provide reciprocal investigatory assistance to overseas regulators under the Securities and Futures Commission Ordinance and the Leveraged Foreign Exchange Trading Ordinance.

I would like to emphasise with particular reference to the comments we have just heard from Mr Chim Pui-chung, that it is not the purpose of these two bills to widen the powers of the SFC. Under the two Bills, the investigatory powers given to the SFC to enable it to assist overseas regulators will be no wider than those presently available to the SFC under the two ordinances. In other words, cases presented by overseas regulators must involve circumstances similar to those which, had the cases arisen in Hong Kong, would have enabled the SFC to invoke its investigatory powers under the two ordinances.

The Bills Committee in this connection did express concern that the phrase "is about to contravene legal or regulatory requirements" in the proposed section 59A(1)(a) and (b) of the Securities and Futures Commission (Amendment) (No.2) Bill 1994 and the proposed section 63A(1)(a) and (b) of the Leveraged Foreign Exchange Trading (Amendment) Bill may give the Securities and Futures Commission (SFC) broader powers of investigation that it has in local cases. These words had originally been adopted so that in certain circumstances a regulatory body could exercise its powers to prevent anticipated breaches of legal or regulatory requirements.