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South China Sea

Watchdog faces critical period

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SCMP Reporter

THE search to find a successor for Robert Nottle as the chairman of the Securities and Futures Commission is now underway. The world, we are told, will be scoured. We hope that is correct.

A local appointee would be an ideal choice, but the position, which will be one of the most critical public appointments in the run-up to 1997, requires above all else, the most qualified person.

Whether chosen from among SFC staff, the local finance industry or even appointing an experienced overseas regulator, any notion of positive discrimination should be avoided.

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The success of the SFC since its formation in 1989 has been due to the professionalism and strong government support.

In the days ahead, its role is going to be even more critical, given the market's rapid transformation.

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Unlike its early years, when regulatory structures were erected for market surveillance, the SFC is now moving towards a situation that requires incremental fine-tuning and increased enforcement.

The evolution of derivative products which add massively to the level of risk individual companies and investors expose themselves to will require careful scrutiny if Hong Kong's penchant for over-shooting any new money-making methods is not to be abused.

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