TNAG-1943-FCO40-2769-Stock-market-and-exchange-rate-in-Hong-Kong-1989 — Page 2

4.

Comments have

however

Standing

Committee

and the Hong Kong

have

been received on the draft Bill from the on Company Law Reform, the two Commissions,

Futures Futures Exchange. Comments on the "Note of been received from all who had copies, with the exception of the Hong Kong

Hong Kong Association of Banks. That Association, which was consulted at the earlier stages has been invited to attend a meeting, but no meeting has so far been arranged.

Main Points",

5. Discussions

principally

6.

1.

8.

particular

on

with the Stock Exchange

Exchange of Hong Kong have centred on the question of funding of the SFC, and in the proposal for an SFC levy on each purchase and sale on the Stock Exchange and Futures Exchange. These discussions are continuing, but their importance, in the eyes of the Stock Exchange, has eclipsed other issues and no comments on other parts

of the Bill have so far been received from the Stock Exchange. The issues relating to funding between the Stock Exchange and the Administration are described in more detail in the ExCo paper on funding for the SFC.

The following paragraphs deal with the topics which have provoked most comments during the December consultative period.

Funding: Apart from the views of the Stock Exchange, referred to in paragraph 5 above, the Stockbrokers Association and the Unit Trust Association thought that the SFC levy should be balanced by corresponding reduction in stamp duty on transactions on the

a

Exchange; and the Society of Securities Analysts considered that the market share of funding of the SFC should be more broadly based and should include an annual charge to listed companies related to the value of their market capitalisation.

Deposit-taking Companies considered that the levy might have adverse effect on the level of business on the Stock Exchange, but the Financial Executives Institute approved of the levy. No other body consulted put forward a view.

an

Appeals: The appeal body, which

which will consist of a tribunal of three chaired by a lawyer independent of the Commission, one member with practical experience (also independent of the Commission) and one non-executive director of the Commission, has met with general

general approval and satisfaction, particularly from those bodies with actual market experience. Only the Bar Association continues to have reservations about the presence of a non-executive director of the Commission on the appeal body. A number of bodies, however, considered that there should be a further right of appeal from the Appeal Board to the High Court on points of law. This is the view of the Bar and the Hong Kong Society of Accountants. The two Commissions also raised the point, but were divided in their views. A further appeal is not considered appropriate by the Administration. It would open the