Regulators urged to review Hong Kong’s ties to the London Metal Exchange
The London Metal Exchange has been at the center of controversy since last year’s nickel crisis. Now a human rights group is calling for London regulators to review the Hong Kong government’s ties to the London Metal Exchange (LME) following China’s violation of human rights and diplomatic agreements with the UK.
In a new paper, campaign group Hong Kong Watch has called on the Financial Conduct Authority (FCA) and the Bank of England to expand their ongoing investigations into the world’s oldest metal exchange.
Both authorities are currently investigating the LME’s actions during last year’s nickel crisis, when the exchange took the unprecedented step of suspending trading amid a record price rally, which also triggered lawsuits from Jane Street and Elliot Capital Management.
Calls for an investigation into the suitability of the Hong Kong stock exchange as an owner
Hong Kong Watch wants regulators’ scrutiny to be extended to whether its owner, Hong Kong Exchanges and Clearing (HKEX), is an appropriate owner of the metal exchange. The campaign group claims that the Hong Kong government, which is the HKEX’s single largest shareholder, no longer meets the so-called fit and proper person criteria to run the exchange.
It points to the ongoing crackdown on human rights in the territory and the Hong Kong government’s complicity in violating the Sino-British Joint Declaration. HKEX is also subject to China’s National Security Law, which leaves room for the Chinese or Hong Kong government to possibly interfere in its affairs, the group argued.
Currently, the Hong Kong government has a very influential role in the HKEX, with the right to appoint six of the thirteen directors to the board.
Commenting on the report, Peter Dowd, a Labor MP, said: “It is worth asking whether it continues to make sense for this British strategic asset to be indirectly owned by the Hong Kong government.”
Sam Goodman, Hong Kong Watch’s head of policy, said: “Given the growing importance of mitigating risk to the UK-China relationship, protecting national security and the transition to green energy, it is hard to imagine that allowing Hong Kong officials to indirectly control this exchange is in the UK’s national interest.”
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