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MDLIAN 9775
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FM HONG KONG
TO PRIORITY HONG KONG GOVERNMENT OFFICE LONDON
TELNO 376
OF 04012OZ JULY 88
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INFO PRIORITY HKGO NEW YORK, HKGO WASHINGTON, HKGO BRUSSELS INFO PRIORITY HKGO GENEVA, UKMIS GENEVA, FCO
INFO SAVING SAN FRANCISCO
HK/GT/165
GUIDANCE TELEGRAM FOR OVERSEAS OFFICES
IMPLEMENTATION OF THE RECOMMENDATIONS OF THE REPORT OF THE
SECURITIES REVIEW COMMITTEE RECONSTITUTION OF THE COMMITTEE OF THE
STOCK EXCHANGE OF HONG KONG LIMITED
FOLLOWING THE CRISIS IN EQUITIES MARKETS IN OCTOBER 1987, THE
GOVERNOR APPOINTED THE SECURITIES REVIEW COMMITTEE (SRC) TO EXAMINE
THE OPERATION AND REGULATION. OF SECURITIES INDUSTRY IN HONG KONG.
THE SRC CHAIRED BY MR IAN HAY DAVISON SUBMITTED ITS REPORT IN MAY 1988. (THIS SUBJECT WAS COVERED BY AN EARLIER GUIDANCE TELEGRAM).
A MONG THE SOME 160 RECOMMENDATIONS MADE WERE PROPOSALS FOR
FUNDAMENTAL CHANGES IN THE CONSTITUTION AND INTERNAL STRUCTURE OF
THE STOCK EXCHANGE OF HONG KONG LTD. (SEHK).
RECOMMENDATIONS OF THE SRC
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2. THE SRC BELIEVED THAT THE SEHK WAS RUN BY ''AN INSIDE GROUP
(WHO) TREATED THE EXCHANGE AS A PRIVATE CLUB RATHER THAN A PUBLIC
UTILITY FOR THE GENERAL BENEFIT OF MEMBERS, INVESTORS AND ISSUERS' THE SRC THEREFORE PROPOSED, INTER ALIA, THAT THE SEHK SHOULD (A) ESTABLISH A NEW 22-MEMBER GOVERNING COUNCIL WHICH COMPRISES FOUR
RESERVED PLACES FOR INDIVIDUAL MEMBERS, FOUR FOR CORPORATE MEMBERS (WHO ARE NOT ALLOWED TO SIT ON THE EXCHANGE'S MANAGEMENT COMMITTEE AT PRESENT), EIGHT UNRESTRICTED ''FLOATING PLACES (ELECTED FROM EITHER INDIVIDUAL OR CORPORATE MEMBERS), FIVE PLACES FOR NON-BROKER LAY (INDEPENDENT) MEMBERS AND THE CHIEF EXECUTIVE, (B) SET UP A NOMINATING COMMITTEE, WHICH IS COMPOSED OF SIX MEMBERS APPOINTED BY
THE COUNCIL INCLUDING THREE EXCHANGE MEMBERS AND THREE NON-MEMBERS OF THE EXCHANGE, WHOSE JOB IS TO PROPOSE CANDIDATES FOR ELECTION TO THE RESERVED PLACES AND (C) AS A (NEXT TWO WORDS UNDERLINED) TRANSITIONAL MEASURE, THE FIRST FIVE LAY (INDEPENDENT) MEMBERS, THE FIRST NOMINATING COMMITTEE AND THE FIRST SCRUTINEERS BE APPOINTED
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