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Evil cabal plot theory not backed by evidence

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Why you can trust SCMP
SCMP Reporter

What a difference a decade makes. When the crash came, trading continued, systems worked and nobody - not yet at least - went bankrupt.

The Hong Kong Futures Exchange came through its biggest test since the 1987 trading debacle triggered mass defaults among brokers and a government-backed bailout. Naturally enough officials are cock-a-hoop.

Last week Chicago Board of Options Exchange chairman William Brodsky waxed lyrical on Hong Kong's success at managing extreme volatility. In derivative circles, at least, we can again claim first division status.

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The 1987 aftermath saw strict clearing arrangements and ultra-conservative margin rules introduced. Twice during the market plunge margins were increased to protect against defaults.

They seem to have worked. Rumours abound of huge losses resulting in some firms exiting the business, but failures have been avoided.

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Considering the large local presence at the exchange that is no small feat.

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