Human Rights Group Urges Regulators to Investigate
Hong Kong Watch calls for scrutiny of the Hong Kong government’s connection to LME in light of China’s human rights violations and diplomatic issues with the UK.
Amid concerns over China’s human rights violations and strained diplomatic relations with the UK, human rights group Hong Kong Watch is urging city regulators to investigate the Hong Kong government’s ties to the London Metal Exchange (LME).
Demand for Regulatory Scrutiny:
In an exclusive report shared with City A.M., Hong Kong Watch has called upon the Financial Conduct Authority (FCA) and the Bank of England to expand their ongoing investigations into the LME, the world’s oldest metal exchange.
Both regulatory authorities are currently reviewing LME’s conduct during the nickel crisis of the previous year, which led to the unprecedented suspension of trading and triggered lawsuits from Jane Street and Elliot Capital Management.
Ownership Under Scrutiny:
Hong Kong Watch is advocating for a broader examination to determine whether Hong Kong Exchanges and Clearing (HKEX), the owner of LME, remains a suitable owner of this significant metals exchange.
The group argues that given the ongoing human rights issues in Hong Kong and the Hong Kong government’s involvement in breaching the Sino-British Joint Declaration, it no longer meets the criteria of a “fit and proper person” to oversee the exchange.
Furthermore, HKEX is subject to China’s national security law, raising concerns about potential interference by the Chinese or Hong Kong government in its operations. Currently, the Hong Kong government wields considerable influence in HKEX, with the right to appoint six out of thirteen directors to the board.
Political Figures Weigh In:
Commenting on the report, Peter Dowd, a Labour MP, raised the question of whether it is still prudent for a UK strategic asset to be indirectly owned by the Hong Kong government.
Sam Goodman, Director of Policy at Hong Kong Watch, emphasized the importance of safeguarding national security and the green energy transition while considering the UK-China relationship. He questioned whether allowing Hong Kong officials to indirectly control the exchange aligns with the UK’s national interests.
Lord Alton of Liverpool, a patron of Hong Kong Watch, underscored the gravity of recent events in Hong Kong, including the issuance of arrest warrants for pro-democracy activists in the UK and mass arrests in Hong Kong. He argued that the Hong Kong government can no longer be considered a “fit and proper person” to indirectly own the LME.
No Official Comments:
Both the Bank of England and the FCA, as well as the London Metal Exchange and HKEX, declined to comment on the matter. The government was also approached for comment but did not respond.