The Committee has also concluded the outstanding Reports on Chapters 1, 4 and 12 of the PAC Report No. 33, i.e. "The Refuse Collection Service of the Urban Service Department", "Management Practices of the Vocational Training Council" and "Water Purchased from Guangdong Province" respectively. Despite of its highly controversial contents, all concerned parties have accepted its conclusions and recommendation. In particular, there were highly visible follow up actions taken by the Administration on the 'Water Purchase' issue.

On 13 March 2000, the Chairman of the Securities and Futures Commission (SFC), Mr. Andrew L T SHEUNG, and the Chief Executive of the Stock Exchange of Hong Kong, Mr. Alex TUSI have provided the Panel with a report on the listing requirements and subscription arrangement for shares on the Growth Enterprise Market. The meeting was widely reported and in particular, SFC has publicly criticised BNP Prime Peregrine Securities for the company's poorly organised settlement arrangements in the Tom.com's listing during February.

The Financial Secretary (FS) also briefed the Panel on macro economic issues on 5 June 2000 and he had also made use of the occasion to consult members on the expenditure proposals for the 2001-02 Budget.

A proposed list of future agenda items is attached as Appendix II for reference.

There were 2 joint meetings with Panels on Manpowers to discuss the research study on unemployment benefits systems on 2 June 2000 and 13 June 2000.

It also studied the Hong Kong Disneyland (Disney Theme Park), the retail and wholesale prices of major fuels, the interconnection and competition in the electricity sector in Hong Kong as well as the revision of Government fees and charges.

TD of HKSA were kept informed of progress on all Bills on a weekly basis and I held two separate stocktaking meetings with the Secretariat on 16 March 2000 and 2 May 2000 to closely monitor progress of all HKSA submissions. I plan to hold one more such meeting to wrap-up this LegCo session before the end of the month.

Considering the proposed section 7H (tariffs and price control), HKSA suggests that "accounting practices" in the first line and second line should be replaced by "accounting policies": and "accounting principles" respectively. Appropriate amendment has now been made.

With regard to the Section 35A (inspection of records, documents and accounts), HKSA considers that Telecommunication Authority's (TA) powers to enter the premises of a licensee and to inspect and make copies of documents, etc. too broad. Amendments have been made to restrict the scope to within the Ordinance's enforcement powers.

HKSA also considers that Section 36D provisions will be unfair to non-licensees in that the grounds or purposes for which TA requires the information are very wide. Besides, TA is not under any confidentiality obligation in respect of the information he obtains. Since the order can be applied by TA ex parte, the non-licensees are not given any prior opportunity to respond to TA's demand for information and that their only course of redress is to seek a judicial review on the magistrate's decision to issue the order. Substantial amendments have now been made to require TA to give notices to concerned parties, receive representation and to submit same to the magistrate for his consideration and further action. TA is also now required to keep the information so obtained confidential and the third party is explicitly excluded from such civil claims and liabilities.

The amended Bill was passed on 7 June 2000 without further controversy.

The Bill seeks to strengthen the regulation of short selling in Hong Kong to safeguard the markets from the failure of price-discovery and lack of transparency brought about by non-compliance with the disclosure rules of short selling. HKSA made no significant comment.

The Bill was passed on 17 May 2000.

In view of the complexity and the significant changes that this legislation will bring to the existing regime of insolvency practices, the Committee feel that we do not have sufficient time to study that part of the 'corporate rescue' procedures properly. We have decided to shelf the relevant parts of the legislation for further consideration till next LegCo. The Insolvency Practitioners Committee made a comprehensive and detailed submission and they have agreed it best to stall scrutiny of the Bill. Given the present requirement of the Bill to pay all workers' wages before launching a legitimate 'corporate rescue', it can only work in rare circumstances. The Bill also require significant refinement before the Committee can give support. There is also an extremely late submission by the HKSA to S.228 of the Bill which is now being sorted out with the Administration.

The Committee suggested that the expected date for resumption of Second Reading should be 21 June 2000.

HKSA made a written submission to the Bill. HKSA had proposed technical amendments to section 27(1A) concerning audit reporting requirements. These amendments have now been accepted by the Administration and CSA's will be moved in due course.

HKSA made 2 written submissions to the Bill. Under clause 2, proposed section 56A(2), HKSA are concerned, in particular, with the references to providing information that is "connected with" the performance of a function of the relevant authority. This is a vague and potentially wide test.

Under the proposed section 56A(2)(b)(i) and (ii), HKSA considered that whereas the term "misleading" is used in paragraph (i), "inaccurate" is used in the negatively-worded provision in paragraph(ii). However, unlike "true/false" and "complete/incomplete", "misleading" and "accurate" cannot be said to be direct opposites. This apparent discrepancy may create confusion.

The Administration has amended the Bill to use the words "false or misleading" to describe information that is intended to be caught by the proposed offences. The scope of Section 56A(2) is now a subject for further negotiation with the Administration who is unwilling to compromise.

HKSA made a written submission to the Bill. Under clause 15 (Debt of Authority), HKSA commented that the accounting and auditing requirements as presently drafted are too brief and loose. The Administration has agreed to address these concern with our proposed CSAs.

HKSA made a written submission to the Bill. Under clause 16 (Separate accounting), HKSA enquired under what circumstances would the Broadcasting Authority (BA) direct a licensee to adopt an accounting practice pursuant to Clause 16(2) of the Bill. Amendments have been made to section 16(2)(c) by deleting "practices" and substituting "principles", to restrict the scope to the enforcement of the BA's powers. The Administration has also voluntarily amended all relevant sections with regard to access to information from third parties to ensure consistency with the 'Telecommunication (Amendment) Bill 1999'. (see paragraph (1) above)

The Bills Committee supports the resumption of Second Reading debate on 21 June 2000.

The Regulation was finally approved on 17 May 2000 after substantial improvements made to satisfy public concerns.

The Financial Resources Rules ("FRR") are subsidiary legislation under the Securities and Futures Commission Ordinance (Cap. 24). The aim of the FRR is to provide appropriate prudential standards on the financial resources of market intermediaries. One of the key objectives of the new FRR is to extend appropriate financial regulation to securities margin financiers.

In the Subcommittee, I have made a brief statement on the following line. HKSA will not oppose the passage of the FRR because we identify with the aim of standardisation but would, urges the SFC to actively investigate the possibility of information technology applications; I also warned that HKSA may not be able to have technical guidelines etc ready on time before the effective data of implementation i.e. 12 June 2000; and there will definitely be cost implications for the securities industry but the extent of additional costs will depend on the exact scope of the further audit works required which can be significant.

The SFC and Subcommittee both recognised our position on record and the SFC had promised further liaison with HKSA through ASCI and CPD programmes.

The Subcommittee has not proposed any amendments. The commencement date for these three pieces of subsidiary legislation is 12 June 2000.