Big guns wheeled out in markets overhaul push

The Government called in an array of market heavyweights yesterday as it launched an offensive to push through financial-market reforms.

Three former stock exchange chairmen, a former futures exchange chairman and two Executive Councillors were among those called in to bolster the Government's case at an initial briefing by Financial Secretary Donald Tsang Yam-kuen.

Sources said the Government would soon set up a working group comprising former stock exchange chairmen Charles Lee Yeh-kwong and Sir Quo-wei Lee, and Executive Councillor Antony Leung Kam-chung to work out details of the proposed reforms and address brokers' concerns.

The meeting saw Mr Tsang, Secretary for Financial Services Rafael Hui Si-yan and Securities and Futures Commission chairman Andrew Sheng brief all the chairmen, vice-chairmen, chief executives, council members and directors of the stock and futures exchanges and the three clearing houses.

It was the highest-level gathering of financial circles since the crash of 1987.

The reforms will change the face of the Hong Kong market in 18 months by demutualising and merging the stock and futures exchanges and their three associate clearing houses and listing the combined entity on the stock market.

The head of the Central Policy Unit and former stock exchange chairman Edgar Cheng Wai-kin also attended the meeting. He proposed in the stock exchange's 1997 annual report reforms similar to those contained in last week's Budget.

After the meeting, Mr Tsang said the exchanges and clearing houses supported the reforms and 'agreed maintaining the status quo was not an option for Hong Kong'.

'I am reassured today that both the Government and market players share the same vision of enhancing the competitiveness of our financial markets,' Mr Tsang said.

'The financial turmoil has clearly shown the forces of globalisation and the trend of increasing integration of the international financial market.' He said the main concerns of exchange members were the value to be ascribed to exchange assets and membership. The two exchanges and three clearing houses would appoint their own financial advisers while the Government would also appoint its own advisers to calculate the pricing, he said.

Sources said Merrill Lynch had a good chance of being appointed as the stock exchange adviser.

Morgan Stanley Dean Witter Asia chairman John Wadsworth, who attended the meeting as vice-chairman of the Hong Kong Futures Exchange, said Morgan Stanley had tendered to be one of the financial advisers of the stock exchange, futures exchange and the Government.

Futures exchange chief executive Randy Gilmore said it would appoint an adviser within two weeks and hoped to give a report to all exchange members within two months.

For the reforms to go ahead, the Government will need the support of 75 per cent of the 500 stock exchange members and 130 futures exchange members in a vote to be held in September.