TNAG-1765-FCO40-2519-Hong-Kong-stock-market-and-exchange-rate-1989 — Page 85

CONFIDENTIAL

FM HONG KONG

CONFIDENTIAL

HKC 100/1

EIVED IN REGISTRY

15 JUL 1988

TOCOPY TODIST Q DIST ?

TO PRIORITY HONG KONG GOVERNMENT OFFICE LONDON

TELNO 397

OF 1410OOZ JULY 88

72

056754 MDLIAN 2929

INFO PRIORITY HKGO NEW YORK, HKGO WASHINGTON, HKGO BRUSSELS INFO PRIORITY HKGO GENEVA, UKMIS GENEVA, F CO

INFO SAVING HKGO SAN FRANCISCO

HK/GT/166

LATEST DEVELOPMENT OF THE IMPLEMENTATION OF THE SECURITIES REVIEW COMMITTEE RECOMMENDATIONS.

CONSULTATION

WHEN THE GOVERNMENT PUBLISHED THE SECURITIES REVIEW COMMITTEE (SRC) REPORT ON 2 JUNE, PUBLIC COMMENTS WERE CALLED FOR BEFORE 4 JULY. AT THE SAME TIME, A SPECIAL UNIT WAS ESTABLISHED IN THE MONETARY AFFAIRS BRACH TO EXAMINE THE SRC RECOMMENDATIONS WITH A VIEW TO THEIR EARLY IMPLEMENTATION.

2=

NEARLY ALL THE VIEWS EXPRESSED IN THE 17 SUBMISSIONS RECEIVED AND IN THE PRESS ARE IN SUPPORT OF THE MAIN THRUST OF THE REPORT, NAMELY THE NEED FOR REFORMING THE EXISTING REGULATORY STRUCTURE FOR THE SECURITIES AND FUTURES INDUSTRY AND FOR ENHANCING MARKET INTEGRITY AND STRENGTHENING RISK MANAGEMENT ON BOTH EXCHANGES.

MAJOR RECOMMENDATIONS

3. HAVING CONSIDERED THESE PUBLIC COMMENTS AND THE ARGUMENTS IN THE REPORT THE GOVERNMENT HAS IDENTIFIED THE FOLLOWING MAJOR RECOMMENDATIONS AND DRAWN UP A ROUGH TIMETABLE FOR THEIR IMPLEMENTATION

·

(A) ESTABLISHMENT OF A NEW INDEPENDENT STATUTORY REGULATORY AUTHORITY OUTSIDE THE CIVIL SERVICE, TO BE CALLED THE SECURITIES AND FUTURES COMMISSION (SFC):

(B) RE-CONSTITION OF THE STOCK EXCHANGE OF HONG KONG AND THE HONG KONG FUTURES EXCHANGE:

(C)

STRENGETHENING OF THE RISK MANAGEMENT STRUCTURE OF THE HONG

1

PAGE

CONFIDENTIAL