MR CHAN CHUN-YING (in Cantonese):
President, in my capacity as Chairman of the Bills Committee on Banking (Amendment) Bill 2017 (“the Bills Committee”), I would like to report on the deliberations of the Bills Committee. The Banking (Amendment) Bill 2017 (“the Bill”) seeks to amend the Banking Ordinance (“BO”) (Cap. 155), to implement the requirements of the Financial Stability Board on recovery planning, implement the new framework of the Basel Committee on Banking Supervision for large exposures, cope with future changes and correspondingly repeal two items of subsidiary legislation made under BO. The Bills Committee has held two meetings and received views from deputations. All deputations are generally in support of the Bill and the deputations have requested the Administration to allow sufficient time for the banking sector to make necessary arrangements before 1 January 2019 to implement the relevant subsidiary legislation to be made by the Administration. The Bills Committee has discussed matters relating to the Bill in the course of deliberations. I would like to briefly report on the points of concern of the Bills Committee as follows: First, the Bills Committee is concerned about how the penalties prescribed for committing an offence relating to recovery planning compare with the penalties under legislation regulating other financial institutions (“FIs”) in Hong Kong. In response, the Administration has advised that, in formulating the offence provisions, it has made reference to BO and the Financial Institutions (Resolution) Ordinance, and the provisions are broadly in line with those under the two Ordinances. So, the proposed penalties are reasonable. Moreover, the Bills Committee is concerned about how the Monetary Authority (“MA”) will ensure that directors of authorized institutions (“AIs”) will be notified of the requirements relating to recovery planning. The European Union. In other words, powers in relation to recovery planning will not be extended to AIs’ holding companies which are incorporated overseas to avoid duplication of supervisory regimes. The Administration and HKMA stress that in the event of an overseas-incorporated AI being under severe stress, they will communicate with the relevant authorities supervising the AI’s holding company for information and necessary coordination. In addition, the Administration has responded to the questions raised by the Legal Adviser to the Bills Committee on the provisions. Details of the Bills Committee’s deliberations are as set out in the report submitted to the Legislative Council. The Bills Committee supports the resumption of Second Reading debate on the Bill and the Bills Committee will not propose any amendments to the Bill. The following is a brief account of my views on the Bill. Since the formal commencement of the operation of the current-term Legislative Council, deliberations on a number of bills related to the financial sector have been completed or the legislative processes are about to be completed within a year and three months, and a number of financial-related bills have been or will be submitted to the Bills Committee for consideration. I must emphasize that the above mentioned legislative amendments are closely linked to the management, employees and clients of the financial sector. Once again, I request the Government and HKMA to give the sector an appropriate buffer period before implementing any new legislation or issuing any new guidance. This will enable members of the sector to have sufficient time to get well prepared, including making reports to the Board of Directors, updating systems, training staff and communicating with clients so as to avoid unnecessary misunderstandings. I fully understand that financial legislation must comply with international standards so as to maintain Hong Kong’s competitiveness in the international financial arena. While constantly introducing new financial legislation and regulations, I urge the Government to conduct a comprehensive review of the provisions on the supervision and operation of FIs and repeal obsolete provisions. Let me illustrate by citing the example of the company registration system in Hong Kong. The first Companies Ordinance was enacted back in 1865. Standing Committee on Company Law Reform established in 1984 decided to conduct a review on the Companies Ordinance on a regular basis. Thereafter, the Government conducted an overall review of the Companies Ordinance in 1994. The new Companies Ordinance was passed by the Legislative Council on 12 July 2012 and fully implemented in 2014. It is essential for such a complicated ordinance covering extensive sectors to keep abreast of the times. Evidently, it is a general trend for the legislation to be constantly changing along with social changes. In light of the momentum of financial technology development, Hong Kong must also make preparations for the enactment of legislation lest the existing legislation should fail to catch up with the pace of technological development. Lastly, I thank members of the Bills Committee who have taken time to attend the meetings even during Christmas holidays and carefully reviewed the relevant provisions. With these remarks, President, I hope Honourable Members will support the Bill.