TNAG-1854-FCO40-2629-Legislative-Council-of-Hong-Kong-memoranda-and-minutes-of-me-1989 — Page 248

HONG KONG LEGISLATIVE COUNCIL 18 January 1989

香港立法局 一九八九年一月十八日

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this Bill to move an amendment to clause 4 to add to the functions of the new commission, the promotion and development of self-regulation by market bodies.

Finally, there is the issue of funding. We shall be discussing this matter with the ad hoc group set up by this Council to study the Bill. Let me merely say at this stage that our objective has been to devise arrangements in line with the recommendation of the Securities Review Committee that the commission should be largely funded by the market but that the Government should also provide a contribution. The Bill provides for the market contribution to be in the form of fees and charges for specific services and activities performed by the commission on a broad cost recovery basis, and a statutory levy on transactions recorded on the exchanges. Subject to the approval of the Finance Committee, the government contribution will take the form of an initial start-up grant, an interest free advance and an annual contribution towards the commission's cost with provision for the commission to borrow from Government, as an emergency measure, if its reserves fall below a certain level.

Sir, may I now turn to the Bill itself. It provides a general regulatory framework, leaving the details to be provided by regulations, administrative procedures and guidelines to be developed by the commission in full consultation with the market. The Bill seeks to vest in the Securities and Futures Commission the functions, powers and duties of the existing regulatory bodies, that is, the Securities Commission, the Commodities Trading Commission and the Office of the Commissioner. Members should be aware that the Bill does not implement all the legislative proposals in the Securities Review Committee Report, but it does give the new commission those additional powers which are considered necessary for it to work effectively during the initial phase of its operation.

The detailed provisions are described in the Explanatory Memorandum to the Bill, but I shall highlight some of the major aspects.

Part II of the Bill establishes the Securities and Futures Commission and deals with its constitutional aspects. By clause 5, the commission will be governed by a board of 10 members, to be divided equally between executive and non-executive directors, the chairman having a casting vote. You, Sir, will appoint and have power to dismiss the chairman and directors, and will determine their renumeration, allowances or expenses. The non-executive directors will keep an independent eye on the commission's executive management, and be actively involved in policy formulation and the appeal mechanism.