HKEx Willing To Hand Over Some Regulatory Responsibility To SFC

by Mary Swire, for LawAndTax-News.com, Hong Kong

17 June 2003

Hong Kong Exchanges and Clearing (HKEx) chief executive, Paul Chow Man-yiu told lawmakers on Friday that the exchange is willing to hand over some regulatory responsibility to the Securities and Futures Commission (SFC) as part of the jurisdiction's stock market reform programme.

According to the South China Morning Post, Mr Chow revealed that HKEx was willing to allow the SFC to oversee the listing rules on company disclosure, connected transactions between major shareholders or directors, and price-sensitive information.

'At present, the exchange can only publicly reprimand those who have broken the listing rules,' he explained to legislators last week, continuing: 'Because the rules have no statutory backing, they lack the teeth to discourage malpractice. By passing some of the listing rules to the SFC, which is a statutory body, rule-breakers could face prosecution and fines.'

However, the HKEx chief was adamant that the exchange should retain responsibility for approving new listings, arguing that: 'Only by keeping the right to approve new listings can HKEx provide a one-stop service for listed funds.'

Following last week's announcement that the reform programme is unlikely to be implemented until at least 2005, in order to allow for extensive consultation, lawmakers have bemoaned the delay. According to the SCMP, Frontier legislator, Emily Lau Wai-hing announced on Friday that:

'Everybody I have met has urged me to call for the government to speed up the reforms. There are so many corporate scandals and there is an urgent need to reform the market.'

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