TNAG-1641-FCO40-2288-Budget-of-Hong-Kong-1987 — Page 30

changes in interest rates. Furthermore, in Hong Kong interest rates do and will continue to change frequently under the linked

exchange rate system.

29.

I do not want to

stifle financial innovation; our

philosophy is to leave the market to develop on its Own with only the minimum amount of regulation necessary to uphold its integrity. But the supervisor of authorised institutions must

also have regard to the interests of depositors. The new Banking Ordinance has introduced provisions which require

adequate capital to support risk assets on the books of

authorised institutions. Although these provisions have not yet

come into effect, because it was felt that a transitional period

of around two years would be required for adjustment, I hope

that these institutions are taking early action to capitalise

themselves adequately.

30.

The Banking Ordinance has now been in operation for six

months. So far all has gone smoothly. But some amendments to

clarify the meaning of certain provisions have been found

necessary.

These amendments are undergoing the usual

consultative process and, subject to the advice of the Executive

Council, I hope to introduce a bill within this session. In the

meantime, the Commissioner of Banking has been considering the

issue of guidelines on particular matters

undertaking of securities and other business

by authorised

institutions and on exposure to a single party. After

consultation, these guidelines will shortly be introduced by the

Commissioner under the appropriate sections of the Ordinance.

31.

such as the

On the securities side, the two controversial subjects,

disclosure of ownership of shares in public listed companies and

insider dealing, are being pursued. Recent events in other

financial centres have added a new dimension to our thinking.

As to disclosure, the Standing Committee

Standing Committee on Company Law Reform

and the Securities Commission have both considered and endorsed

a draft Bill. Subject to the advice of the Executive Council,

9

/it

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