TNAG-1896-FCO40-2690-Calls-on-Francis-Maude--Minister-of-State-for-Foreign-and-Co-1989 — Page 108

WINAAK (4)

Securities and Futures Commission

Annex ▸

1.

Following the market crash in October 1987, the Governor

appointed a Securities Review Committee (SRC) to examine the powers,

management and operation of the Stock and Futures Exchanges and of the various regulatory bodies in Hong Kong. The Committee published

its report in June 1988 and the Government announced that it

accepted the general thrust of its recommendations. Since then top

priority has been accorded to the implementation of its major

recommendations. Reform of the Stock Exchange's management

structure and constitution was completed in October, within one year

of the crash. A reconstruction of the futures market, in line with

the SRC recommendations, is well in hand.

2. A third major recommendation of the SRC was for the creation of

a new regulatory authority for the securities and futures

industries.

The new body is called the Securities and Futures

Commission (SFC) and has replaced the existing regulatory bodies

namely the Securities Commission, Commodities Trading Commission and

the Office of the Commissioner for Securities and Commodities

Trading.

3. To expedite establishment of the SFC, the present legislation confines itself to vesting in the SFC the powers, functions and

duties of the existing regulatory bodies and giving the SFC those

additional powers which are considered necessary for it to operate

effectively during the initial stage of its establishment. The

objective has been to strike the right balance between the need for

adequate powers to curb market abuses and the importance of

preserving civil liberties; and between the desire to encourage the

growth of markets and the need to ensure that they do not get our of

control. The ultimate aim is to create an efficient and orderly

market to enhance Hong Kong's status as a pre-eminent capital market

of South East Asia and as an important international financial

centre.

There was extensive consultation with market bodies and other

interested parties and significant modifications were made to

4.