TNAG-1765-FCO40-2519-Hong-Kong-stock-market-and-exchange-rate-1989 — Page 102

Annex D

9.53.

Given the

the market bodies

entirely independent

representatives

о

key role of the new SC as watchdog over

and to ensure that the watchdog body is

from the Exchanges, we recommend that

O E the Exchanges and the clearing houses

Council members) should not sit on the

(whether staff Or

new SC board or on its Advisory Committee.

9.54.

In any case, representation should be unnecessary

as informal machinery can be established to enable the SC,

the Exchanges and the clearing houses to work closely

together.

9.62.

Finally, the Administration should not have its own Advisory Committee on securities industry matters and should not receive the agenda or minutes of the SC's board

Advisory Committee meetings.

If the Administration

wants advice on securities industry matters, it should turn

to the SC.

9.63.

the

the

Το avoid undermining the new SC's independence,

Government should not be represented on its board. If

Administration is to monitor the new SC effectively

(i.e.

be the watchdog over the watchdog), it should not play a direct role in day-to-day policy determination. The role of Government should be to ensure that the SC does its

job

to

to

properly. If the SC fails, the Government must be free reach an independent view of what is the right course of action in any particular case. Taking the words of William

Douglas, the US SEC chairman in the late 1930s, government "would keep the shotgun, so to speak, behind the door, loaded, well-oiled, cleaned, ready for use but with the hope it would never have to be used" (3).

о

I

2