HK beefs up advice after Lehman debacle
Source: Xinhua |
June 7, 2012, Thursday
|
Print Edition
Print Edition
The Hong Kong government and its monetary authority yesterday said many recommendations have been implemented to enhance regulation since the Lehman Brothers incident and they endeavor to foster investor protection and financial stability in the future.
The Legislative Council Subcommittee, after three years of investigation, released a long report, which blamed lax regulation, banking malpractice and government inaction for the problems associated with the sale of the financial products.
Around 43,700 Hong Kong people invested nearly HK$15.7 billion (US$2.02 billion) in products issued or guaranteed by Lehman Brothers before it collapsed in September 2008.
Most of these products were called mini-bonds, although they were not bonds but complex and high-risk structured products. When Lehman Brothers collapsed in 2008, many of these products became worthless or nearly worthless.
In response to the report, the government said in a statement that the scope and magnitude of the global financial crisis in 2008 exceeded the hopes of all parties and the ramifications were cross-sectoral, cross-border and far-reaching.
Following the incident, the Hong Kong Monetary Authority and the Securities and Futures Commission submitted reviews making numerous recommendations.
The government said it has implemented the advice with the HKMA and the SFC in the past three years in phases, which cover areas like enhancing the selling practices of investment products, the business conduct of intermediaries, and investor education.
When formulating and implementing financial policies, the city government said it will foster the two main policy objectives of investor protection and financial stability.
The HKMA noted the report does not fully take into account information and representations it has submitted, in particular the impact on investors of the sudden collapse of Lehman Brothers and the supervisory actions taken by the HKMA before the firm collapsed.
The HKMA also said it, along with the SFC, facilitated large-scale settlement between banks and investors of mini-bonds and structured financial products related to Lehman Brothers.
Most investors have been able to recover a significant portion of the money they invested.
The Legislative Council Subcommittee, after three years of investigation, released a long report, which blamed lax regulation, banking malpractice and government inaction for the problems associated with the sale of the financial products.
Around 43,700 Hong Kong people invested nearly HK$15.7 billion (US$2.02 billion) in products issued or guaranteed by Lehman Brothers before it collapsed in September 2008.
Most of these products were called mini-bonds, although they were not bonds but complex and high-risk structured products. When Lehman Brothers collapsed in 2008, many of these products became worthless or nearly worthless.
In response to the report, the government said in a statement that the scope and magnitude of the global financial crisis in 2008 exceeded the hopes of all parties and the ramifications were cross-sectoral, cross-border and far-reaching.
Following the incident, the Hong Kong Monetary Authority and the Securities and Futures Commission submitted reviews making numerous recommendations.
The government said it has implemented the advice with the HKMA and the SFC in the past three years in phases, which cover areas like enhancing the selling practices of investment products, the business conduct of intermediaries, and investor education.
When formulating and implementing financial policies, the city government said it will foster the two main policy objectives of investor protection and financial stability.
The HKMA noted the report does not fully take into account information and representations it has submitted, in particular the impact on investors of the sudden collapse of Lehman Brothers and the supervisory actions taken by the HKMA before the firm collapsed.
The HKMA also said it, along with the SFC, facilitated large-scale settlement between banks and investors of mini-bonds and structured financial products related to Lehman Brothers.
Most investors have been able to recover a significant portion of the money they invested.
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