TNAG-1943-FCO40-2769-Stock-market-and-exchange-rate-in-Hong-Kong-1989 — Page 10

XCC (89) 5

34

All interested bodies were again consulted in a further round of discussions in mid December 1988. In order to start the legislative process as soon as possible and to reduce the risk of further premature leaks, we decided not to expose the full text of the Bill in this latest round of discussions, except to certain bodies, namely the two Exchanges, the SC, the CTC, the Standing Committee on Company Law Reform, the Law The Society of Hong Kong and the Hong Kong Bar Association. OMELCO Panel on Finance, Taxation and Monetary Affairs was also briefed by the Secretary for Monetary Affairs, the GSC and the ASL

The other bodies оп the major provisions in the Bill. were, however, provided with a note on the major points of the on issues which Bill, specifically on the revised provisions were perceived as contentious. Annex F summarises comments on the more important issues raised in the Bill and our response to them. A copy of the above-mentioned note is attached to it. Interested bodies will of course have further opportunities to comment on the Bill when it is published and presented to the legislature. We have carefully considered the views expressed in these discussions in finalizing the Bill for submission to the Council.

Public Reaction

35

an

been

The SRC's recommendation for the establishment of independent SFC appeared to have

have been

been generally well received

Concern has the investing public. by the markets and expressed by a number of parties about the extent of the powers

be vested in the SFC, the adequacy of the checks balances provided for, and the cost of

regulation. principal issues which have caused concern

to

(a) funding for the SFC (paragraph 13 above);

(b)

(c)

of

supervision

and

powers

investigation, including right of silence and power of

of entry (paragraph 27 and Annex F);

composition of the Board of Appeal (paragraph 24); and

(d) right of appeal to the High Court (paragraph

26, and Annexes C and D).

and

The

In the light of comments by out side parties, we have modified The our initial proposals put forward in the draft provisions. Bill takes full account of the comments and concerns of market users and other interested bodies, and balances these against the overriding need to protect investors while enabling markets to develop and grow. In its present form, it should be able to

approval

acceptable generally to market users and the community. On the question of funding, there may however be continuing opposition from the SEHK to the proposed levy (paragraph 13 above) and from those whose support it enlists (see memorandum XCCI(89)4).

attract

a

broad

consensus

of

and

be