Financial Regulatory Structure To Be Reviewed In Hong Kong

by Mary Swire, Tax-News.com, Hong Kong

09 January 2009

Hong Kong's Financial Secretary John Tsang has asked the SAR's Secretary for Financial Services and the Treasury to conduct an immediate review to improve the area's financial regulatory structure and enhance investor protection as soon as possible.

Speaking to reporters, Tsang said he had received two reports on the Lehman Brothers minibonds incident prepared by the Monetary Authority and the Securities and Futures Commission.

Although the government agrees in principle to make the reports public, parts of them must be kept confidential temporarily to avoid legal implications. Upon completion of the investigation and enforcement work, those parts will also be made public.

Tsang explained that the government will first focus on administrative measures to improve regulations and better protect investors, such as revising administrative guidelines or codes on the vetting and sale of financial products where necessary.

It will then conduct a structural review to establish what may be required in order to improve the regulatory structure and protect investors as well as other measures that need to be implemented through legislation or legislative amendment.

"Our aim is to implement as soon as possible measures suitable for Hong Kong, responsive to the aspirations of the relevant sectors and also in line with the financial development strategy and long-term interest of Hong Kong," Tsang remarked.

He then continued to explain that the government is open to ways of improving the existing regulatory system and enhancing investor protection, adding that it will listen to the views of various sectors:

"We need to consider all relevant factors, such as the unique background and market needs of Hong Kong, the global trend of financial development, recommendations from international financial institutions including G20 and the Financial Stability Forum, and reports submitted by the Monetary Authority and the Securities and Futures Commission," he stated.

Lastly, he reiterated that Hong Kong must balance proper regulation and financial innovation to move with the times to maintain its status as an international financial centre.

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