HK's Regulatory System Is Sound, Financial Secretary Assures

by Mary Swire, Tax-News.com, Hong Kong

16 September 2008

Hong Kong's monetary authorities will ensure trading on the Hong Kong stock market is conducted in an orderly fashion in the wake of Lehman Brothers' bankruptcy filing in the US, Financial Secretary John Tsang has stated, assuring that the city's supervision and regulatory system is sound.

Mr Tsang told reporters on Tuesday that the Government is closely monitoring developments worldwide, and is in close communication with the Monetary Authority, Securities & Futures Commission and Hong Kong Exchanges & Clearing.

His remarks were echoed by Secretary for the Financial Services & the Treasury Prof KC Chan.

Mr Tsang said there should not be worries about local institutions' finances, adding that the local economy will slow in the second half of the year as forecast.

Sharing their views, Monetary Authority Chief Executive Joseph Yam said although the Lehman Brothers bankruptcy will have a negative impact on the Hong Kong markets, there will not be problems if systems operate in a normal manner.

Noting price adjustments in the markets are unavoidable due to this major turbulence, Mr Yam said the authority can provide liquidity to markets under the current mechanism if the situation warrants.

The Stock Exchange announced on Tuesday, September 16 that it had suspended trading of Lehman Brothers Securities Asia Limited in Hong Kong's securities and stock options markets. Its right to access AMS/3, the automatic order matching and execution system, and the options trading system is also suspended until further notice.

On the same day, the Securities & Futures Commission approved the issue of restriction notices on four Lehman Brothers entities in Hong Kong, to preserve the assets of the companies and their clients, and to protect the interests of these clients and the investing public.

The entities are Lehman Brothers Asia Limited, Lehman Brothers Securities Asia Limited, Lehman Brothers Futures Asia Limited and Lehman Brothers Asset Management Asia Limited.

The restriction notices are issued under the Securities & Futures Ordinance, and the commission will continue to monitor the situation and will vary the restriction notices if and when necessary.

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