TNAG-1765-FCO40-2519-Hong-Kong-stock-market-and-exchange-rate-1989 — Page 104

Annex E

Summary of public reaction

the SRC's recommendations for the establishment

of a Securities and Futures Commission

Ad Нос Group to study legislation governing the regulation of the Stock Exchange and Futures Exchange

LeaCo

1.

At an initial meeting of the LegCo Ad Hoc Group with the Administration held on 2 June 1988, several LegCo members voiced concern over the powers and functions of the new regulatory authority vis-a-vis those of the Government and its relationship with other sectors of the economy.

Submissions

Stock Exchange of Hong Kong

2.

The SEHK endorsed the SRC's recommendations for a practitioner-based regulatory system, in particular, its emphasis on the self-regulatory role of the Exchanges. The Exchange urged the Government to pay special attention to the costs of regulation and the accountability of the new regulatory authority. Specifically, it requested that

(a) the Government should, in conjunction with the Exchanges, work out the role and costs of the Exchanges and the new regulatory authority in the regulation of the markets;

Government

(b) the

regulation

suffocate market development; and

should

ensure

that

should

promote but

not

a

body should be framework they would not be

of

(c) powers of the regulatory

exercised

within

accountability SO that

abused.

-

Hong Kong Futures Exchange

3.

SRC's

The HKFE endorsed the

recommendations in principle and urged for their early implementation. It however felt that the accountability of the new regulatory authority could be enhanced by making the following changes to the recommendations

1