Bills Committee on Securities (Insider Dealing) (Amendment) Bill 1998 (Minutes) 6 Nov 1998

LC Paper No. CB(1)119/99-00
(These minutes have been seen
by the Administration)

Ref.: CB1/BC/3/98/2

Bills Committee on
Securities (Insider Dealing) (Amendment) Bill 1998

Minutes of meeting held on
Friday, 6 November 1998, at 10:45 am
in Conference Room B of the Legislative Council Building

Members present :

Hon Andrew WONG Wang-fat, JP (Chairman)
Hon Albert HO Chun-yan
Hon Martin LEE Chu-ming, SC, JP
Hon Eric LI Ka-cheung, JP
Hon Margaret NG
Hon Ronald ARCULLI, JP
Hon SIN Chung-kai
Dr Hon Philip WONG Yu-hong
Hon Jasper TSANG Yok-sing, JP
Hon Ambrose LAU Hon-chuen, JP

Members absent : Hon CHAN Yuen-han
Hon FUNG Chi-kin

Public officers attending :

Mr Bryan CHAN: Principal Assistant Secretary for Financial Services
Miss Hinny LAM: Assistant Secretary for Financial Services
Ms Alice TAI, JP: Judiciary Administrator
Ms Stella CHAN: Government Counsel

Clerk in attendance :

Ms Estella CHAN: Chief Assistant Secretary (1)4

Staff in attendance :

Mr KAU Kin-wah: Assistant Legal Adviser 6
Ms Connie SZETO: Senior Assistant Secretary (1)1

I Election of Chairman

Mr Andrew WONG Wang-fat was elected Chairman of the Bills Committee.

II Meeting with the Administration
(LC Paper No. CB(1)433/98-99; LegCo Brief ref.: C2/2/2C(97)XVI)

2. The Bills Committee noted that section 15(2) of the Securities (Insider Dealing) Ordinance (Cap. 395) (the Ordinance) required a judge, which under the Ordinance was defined as either a "judge" or a "former judge" of the Court of First Instance, to be appointed by the Chief Executive (CE) as the chairman for the Insider Dealing Tribunal (IDT). The object of the Securities (Insider Dealing) (Amendment) Bill 1998 (the Bill) was to amend the definition of "judge" in section 2(1) of the Ordinance to include a deputy judge of the Court of First Instance so as to enlarge the pool of eligible candidates for appointment as chairmen of IDT. Enlargement of the pool of candidates was necessary to cope with the increasing workload of IDT as evident by a growing number and increasing complexity of cases which were attributed by the rapid development in Hong Kong's securities and futures market.

3. The Bills Committee also noted that when the Financial Affairs Panel was briefed on the Bill at its meeting on 7 September 1998, some Panel members had expressed concern about the possibility of conflict of interests if senior counsel in private practice were to be appointed as chairmen of IDT. The Bills Committee took note of the Administration's explanation that the Chief Justice (CJ) would take careful and thorough consideration of the appropriateness and suitability of a candidate before advising CE in making the appointment. The Judiciary also had in place a set of guidelines for judicial appointment to address the issue of possible conflict of interests.

4. Some members, however, considered that "former deputy judges" should also be eligible for appointment as chairmen of IDT. They opined that extending the eligibility of appointment would further enlarge the pool of candidates and would avoid the problem of inconsistency in the arrangement. Since "judge" as defined in the Ordinance included "former judge", hence the extension of the definition proposed in the Bill to include "deputy judge" should also be correspondingly expanded to cover "former deputy judge".

5. In response, the Principal Assistant Secretary for Financial Services explained that due to the difficulties in assigning substantive judges of the Court of First Instance to IDT's work and in identifying suitable former judges to be the chairmen, the Administration considered it necessary to enlarge the pool of eligible candidates. However, in order not to widen the scope of eligibility of appointment too broadly, which might give rise to concerns about the quality of the appointees and thus the credibility of the tribunal system, the Administration did not propose to include former deputy judges for appointment as chairmen of IDT. The Judiciary Administrator supplemented that deputy judges were temporary appointments made by CJ and such appointments were usually necessitated by the operational needs of the High Court and/or to test a candidate's suitability for substantive appointment. There might be the possibility that some former deputy judges were found to be unsuitable for substantive appointment. She stressed that, for those who were found suitable, CJ could re-appoint them as deputy judges for the purpose of the subsequent appointment as chairmen of the Tribunal.

6. Mr TSANG Yok-sing shared the Administration's view that the credibility of candidates was of paramount importance and hence supported the Bill.

7. Members generally had reservations about the arrangement of re-appointing a former deputy judge in order to enable him to be eligible for appointment as chairman of IDT. They maintained the view that former deputy judges should be included as eligible candidates for appointment as chairmen of IDT. They added that notwithstanding that deputy judges were temporary appointments, they were very often District Court judges or senior counsel in private practice with high judicial and professional qualities. Furthermore, members took into consideration that CJ would need to take careful and thorough consideration of the appropriateness and suitability of the candidates in the course of appointment of deputy judges in accordance with the Judiciary's existing guidelines and CE would act on the advice of CJ when making appointments for the positions of chairmen of IDT. These practices would serve as safeguarding mechanisms for ensuring the suitability of the appointees.

8. Noting the important gate-keeping role of CJ and that it had been a standing practice that CE would consult CJ before appointing the IDT Chairman, members suggested amending section 15(2) of the Ordinance to expressly provide that appointment of IDT's chairman by CE had to be made on the recommendation of CJ.

9. After deliberation, the Administration undertook to consider the suggestion of amending the Ordinance to expressly provide that CE would appoint chairmen of IDT on the recommendation of CJ. Members also urged the Administration to take forward their view on making former deputy judges eligible for appointment as chairmen of IDT.	Admin.

10. Members agreed that depending on the Administration's formal written responses to views of members expressed at this meeting, the Bills Committee might consider moving Committee Stage Amendments (CSAs) to give effect to members' suggestions recorded in paragraphs 8 and 9 above.

III Any other business

11. There being no other business, the meeting ended at 11:30 am.

Legislative Council Secretariat
14 October 1999