HK Pursuing Ambition To Be China's Global Financial Centre

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

23 September 2010

A speech by the Permanent Secretary for Financial Services and the Treasury (Financial Services), Au King-chi, at the Hong Kong Institute of Bankers' 2nd Annual Banking Conference, has focused on the evolving role that Hong Kong is playing as China’s global financial centre.

She said that Hong Kong needs to align with the regulatory standards of key overseas jurisdictions to ensure a predictable and consistent regulatory regime within which financial institutions can operate. “Our compatibility with international standards and best practices will help to attract overseas financial institutions wishing to harness the business potential in the region.”

“We must bring together our unique ‘China advantages’ and ‘global advantages’ to reinforce Hong Kong's status as the preferred springboard to carry out not only China-related activities in the global financial arena, but also global operations in the Greater China market.”

“As China's global financial centre, Hong Kong is leveraging its advantages in conducting activities in asset management, offshore renminbi (RMB) business and capital formation, attracting and anchoring capital and talent from within and outside the country,” she added.

To achieve its objectives, she emphasized that Hong Kong is pursuing a number of initiatives to enhance market transparency, to improve its regulatory regime to protect investors and maintain financial stability, and to remove any unnecessary hurdles to facilitate compliance and promote market development.

For example, market transparency is being enhanced by promoting a continuous disclosure culture among Hong Kong’s listed corporations. Proposed legislation will require listed companies to make available more information for investors to make informed decisions. A bill is planned to be introduced into the Legislative Council next year.

The Working Group on Scripless Securities Market led by the Securities and Futures Commission is also to publish its consultation conclusions on the proposed operational model for a scripless securities market. As a first step, the government has already enacted amendments to the Companies Ordinance in July this year to allow for scripless trading.

With regard to investor protection, she stated that Hong Kong’s regulators have already introduced a series of requirements to enhance risk disclosure for investment products and tighten the regulation of sale conduct. In addition, the regulators have also invited the government to establish a financial dispute resolution mechanism.

Finally, she pointed out how the government was attempting to deepen Mainland-Hong Kong financial cooperation. Hong Kong's strategic positioning as China's global financial centre under ‘one country, two financial systems’ gives its financial market “unparalleled strengths in serving China's development needs, while safeguarding its financial security”.

“In a nutshell,” she concluded. “Hong Kong enjoys an ‘offshore’ financial status, while remaining organically domestic in serving the giant economic powerhouse of China. Hong Kong is an effective testing ground for the internationalization of the RMB, as well as a preferred asset management hub, and the premier listing platform for Mainland companies wishing to go global.”

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