Bankruptcy contingency plan to cover HKEx

January 22, 2015 10:23
As Hong Kong's sole stock market operator, HKEx is vulnerable in the event of a market collapse, according to proponents of a resolution regime.  Photo: HKEJ

Hong Kong Exchanges and Clearing Ltd. (HKEx) (00388.HK) will be covered by a resolution regime aimed at ensuring financial stability during an economic crisis.

The unprecedented inclusion of HKEx in such a scheme is being proposed because it is vulnerable in the event of a market collapse, the Hong Kong Economic Journal reported Thursday.

A second round of public consultation on the proposal in under way. A draft bill is expected to be submitted to the legislature by July next year after another round of public consultation.

The resolution regime gives regulators the power to administer financial institutions that are on the brink of insolvency, the report said.  

Au King-chi, Permanent Secretary for Financial Services and the Treasury, said the government received 33 responses in the first round of consultation in which it gave five proposals.

These included the option to transfer the concerned financial institutions to a commercial buyer or to a bridging agency.

Also, these companies could be made to undertake statutory self-resolution, or privatization, using public money only as a last resort.

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