City regulators urged to review Hong Kong’s ties to the London Metal Exchange
City regulators must scrutinise the Hong Kong government’s ties to the London Metal Exchange (LME) following China’s breaches of human rights and diplomatic agreements with the UK, a human rights group has demanded.
In a new paper, shared exclusively with Morning Wire, campaign group Hong Kong Watch has called on the Financial Conduct Authority (FCA) and Bank of England to extend their ongoing investigations into the world’s oldest metal exchange.
Both authorities are currently reviewing the conduct of the LME during last year’s nickel crisis, when the exchange took the unprecedented step to suspend trading amid a record price rally, which also sparked lawsuits from Jane Street and Elliot Capital Management.
But Hong Kong Watch wants the regulators’ reviews to be expanded into whether its owner, Hong Kong Exchanges and Clearing (HKEX), is a suitable owner of the metals exchange.
The campaign group argues that the Hong Kong government, which is 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 human rights crackdown in the territory and the Hong Kong government’s complicity in the breach of the Sino-British Joint Declaration.
HKEX is also subject to China’s national security law, leaving scope for the Chinese or Hong Kong government to potentially meddle with its affairs, the group argued.
Currently, the Hong Kong Government has a highly influential role in HKEX, with the right to appoint six of the thirteen directors to the board.
Commenting on the report, Peter Dowd, a Labour MP, said: “It is worth asking whether it continues to make sense for this UK strategic asset to be indirectly owned by the Government of Hong Kong.”
Sam Goodman, Hong Kong Watch’s Director of Policy, said: “Given the growing importance of de-risking the UK-China relationship, protecting national security, and the green energy transition, it is hard to imagine that allowing Hong Kong officials to indirectly control this exchange… is in the UK’s national interest.”
Lord Alton of Liverpool, a patron of Hong Kong Watch, added: “The issuing of arrest warrants and bounties for Hong Kong pro-democracy activists in the UK, the mass arrest of pro-democracy lawmakers, journalists, and civil society leaders in Hong Kong, and the freezing of billions of pounds of pension savings from ordinary Hong Kongers, all point to why the Hong Kong Government is no longer a fit and proper person to indirectly own the LME.”
The Bank of England, the FCA, the London Metal Exchange and HKEX all declined to comment.
The government was approached for comment.