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HKC 100/1
FM HONG KONG
TO PRIORITY HONG KONG GOVERNMENT OFFICE LONDON
TELNO 341
OF 17110OZ JUNE 88
INFO PRIORITY FCO GENEVA
INFO PRIORITY HKGOS NEW YORK, WASHINGTON, BRUSSELS, GENEVA
INFO SAVING SAN FRANCISCO (HKO)
147306
MDLIAN 6069
HKG/GT/164
REPORT OF THE SECURITIES REVIEW COMMITTEE
SUMMARY
THIS TELEGRAM REPORTS ON THE PUBLICATION FO THE SECURITIES REVIEW COMMITTEE REPORT, THE HONG KONG GOVERNMENT'S INITIAL RESPONSE TO IT AND THE PRESENT POSITION. IT ALSO PROVIDES A LINE TO TAKE FOR
DEALING WITH ANY QUERIES.
BACK GROUND
THE CRISIS IN INTERNATIONAL SECURITIES MARKETS IN OCTOBER 1987
HIGHLIGHTED VARIOUS SHORTCOMINGS IN THE SECURITIES INDUSTRY IN HONG KONG. IN NOVEMBER 1987, THE GOVERNOR APPOINTED A COMMITTEE TO REVIEW THE CONSTITUTION, POWERS, MANAGEMENT AND OPERATION OF THE HONG KONG STOCK EXCHANGE (HKSE), THE HONG KONG FUTURES EXCHANGE (HKFE), THE SECURITIES COMMISSION (SC), THE COMMODITY TRADING COMMISSION (CTC) AND THE OFFICE OF THE COMMISSIONER FOR SECURITIES AND COMMODITIES
TRADING (OCS) THE SECURITIES REVIEW COMMITTEE (SRC), CHAIRED BY LLOYD'S FORMER CHIEF EXECUTIVE, IAN HAY DAVISON, WAS TASKED TO SUBMIT ITS REPORT WITHIN SIX MONTHS. THE REPORT WAS SUBMITTED TO THE
GOVERNOR ON 27 MAY 1988.
CURRENT SHORTCOMINGS
2.
WHILST THE OCTOBER MARKET CLOSURE AND FUTURES MARKET PROBLEMS
HAVE ADVERSELY AFFECTED HONG KONG'S INTERNATIONAL REPUTATION AND ERODED CONFIDENCE IN ITS MARKET, THE SRC HAS PINPOINTED THE FOLLOWING MAIN SHORTCOMINGS IN THE SECURITIES INDUSTRY
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(A) A FUNDAMENTAL REVISION OF THE INTERNAL CONSTITUTION OF THE STOCK EXCHANGE, IN PARTICULAR ITS GOVERNING COMMITTEE, WITH PROPER
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