Opinion | HKMEx saga puts spotlight on regulatory slips
Why was it allowed to be called an exchange when it was unable to get licence from the SFC
Five arrested, three charged, and its chairman Barry Cheung Chun-yuen having to quit all public posts, including that in the Executive Council. The unravelling of the scandal-ridden and short-lived Hong Kong Mercantile Exchange has not been any less dramatic than a film.
As the HKMEx story still unfolds, it has turned the spotlight on certain regulatory oversights that might have contributed to the saga. One key concern: its name.
Allowing the HKMEx to be called an exchange was simply misleading. This, along with "professional investors" and "capital preservation funds" were the three most misleading terms that had escaped regulatory scrutiny and undermined investors' interests.
HKMEx sounds similar to HKEx - Hong Kong Exchanges and Clearing - but they are as different as chalk and cheese.
The HKEx operates the stock and futures markets, handling an average HK$70 billion in daily turnover that once reached a record HK$210 billion in October 2007. The stock market has about 400 broker members and a history of more than 100 years.
The HKMEx, founded two years ago and chaired by Cheung, traded only gold and silver futures with only a few contracts dealt each day. It has 37 broker members.