XN000022-1996-09-06 — Page 5

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"We have implemented many reforms recommended by the Securities Review Committee and introduced safeguards at every level."

Mr Tsang highlighted some of the more important reforms which included:

the establishment of the Securities and Futures Commission, to ensure the integrity of the markets and the protection of investors;

the restructuring of the clearing and guarantee system of the Hong Kong Futures Exchange to strengthen the risk management arrangements;

the establishment of Hong Kong clearing and the Central clearing and settlement system which now provides guaranteed clearing and settlement services for over 99 per cent of all Stock Exchange transactions; and

the overhaul of the stock exchanges by building safeguards into the constitution of the Stock Exchange, with representation on the governing body for individual and corporate members, and for independent members to be appointed to ensure that the Exchange is properly governed and works in the interests of all members and users.

"We are confident that our system now in place is efficient by international standards and can meet the demands of a sophisticated financial marketplace", Mr Tsang said.

"As an illustration, Hong Kong has stood up well in the wake of international financial crises, notably the one brought on by the Barings incident.

"We know that we must not sit still and must continue to improve our systems and service to investors, setting an ever rising benchmark of excellence as an international financial centre in the first league."

As for further integration with the international markets, Mr Tsang said fortunately Hong Kong had come to appreciate the danger of a lack of synchronisation in the development of payment and settlement arrangements at an early stage.

"We are aware that a weak link in the system could well mean an inability to prevent an individual failure from sparking off a domino-like chain reaction spreading through the payment and settlement system," he said.