Hong Kong's SFC To Have Additional Stock Market Powers

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

14 February 2003

There had been speculation that Hong Kong Securities and Futures Commission chairman Andrew Sheng might step down next September when his existing contract expires, wounded by last year's 'penny share' fiasco, but there was no sign of that when he set out the SFC's program for stock market supervision this year.

Under the portmanteau Securities and Futures Ordinance, which was passed last year, the SFC will take on additional powers over the stock market on April 1st, although it will still share responsibility in many respects with Hong Kong Exchanges and Clearing, HKEx, the market's first-line regulator.

Mr Sheng said: "We will enforce the law to protect investors. There are likely to be more investigations into listed companies and enforcement action arising from dual filing beginning April 1." The SFC already carried out 36% more investigations into alleged market malpractice in 2002 than in the previous year, he said.

The Chairman also said that sponsors and major shareholders would face tougher regulation. "The SFC will take stern action against IPO sponsors whose work falls short of the high standards expected of them. There will also be tougher disclosure of listed companies' interest regime under the Securities and Futures Ordinance."

The Ordinance requires listed companies to file all announcements with both the SFC and HKEx as from April 1st; it also increases the penalties for breaches of securities laws, and makes insider dealing a criminal offence.

Asked about PCCW's abortive bid for Cable and Wireless last week, Mr Sheng said the commission would submit a report to Secretary for Financial Services and the Treasury Frederick Ma Si-hang. Hong Kong Exchanges and Clearing is also studying a possible breach of regulations.

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