CONFIDENTIAL
partly because of fear that Hong Kong was intent on
modelling its market supervision too closely on that applied
in the UK. But much of the heat now appears to have gone
out of the over-regulation debate.
4. In general, the tightening of Hong Kong's financial
regulations has been welcomed and has created greater trust in Hong Kong as a financial centre. Nevertheless, there is
still strong resistance from the large number of small local
brokers to implementation of some of the Hay Davison reforms, particularly those affecting the constitution of the Hong Kong Stock Exchange. Despite the successful
prosecution of Mr Ronald Li, the former Stock Exchange
Chairman and his sentence last month to a 4 year jail term,
his former associates still form a powerful constituency in the Hong Kong Stock Exchange (including Mr Philip Wong, who
is tipped to succeed Sir Q W Lee as Chairman of the
Exchange).
5.
Mr Hay Davison will be aware of Mr Keswick's complaints
about extraterritoriality and his threat to delist since
this issue has recently received wide press coverage. It would be interesting to know whether Mr Hay Davison thinks
that the Hong Kong authorities have got the balance of regulation about right both in general terms and in relation
to the regulation of redomiciled companies like Jardines.
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