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Tsang Plugs HK's Regulatory Advances

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

01 December 2010


During a speech delivered by the Financial Secretary, John C Tsang, at the First Pan-Asian Regulatory Summit in Hong Kong, he reviewed the advances made by Hong Kong in its regulatory regime.

He said that, while Hong Kong’s positioning as China's global financial centre under the principle of "one country, two systems" gives its markets a distinct edge, Hong Kong has a role to play in safeguarding financial security for the whole country, with Hong Kong maintaining its own legal, taxation and regulatory systems.

Adding that, while the “city has built its reputation on providing a business-friendly environment that is fully integrated with the rest of the world,” he pointed out that “this includes a highly open and internationalized market and a transparent regulatory regime.”

He added that “Hong Kong was one of the few developed markets that did not have to impose new, emergency short selling regulations during the financial crisis because our rules, which were introduced back in 1998, subsequent to the Asian financial crisis, remain applicable under the current situation.”

With regard to future developments, Tsang then confirmed that Hong Kong has “mapped out a multi-pronged strategy to improve our market quality, promote investor protection, facilitate market development, and enhance our regulatory system.”

“To improve market transparency and quality, our aim is to require listed corporations to disclose price sensitive information in a timely manner,” he stated. “This will bring our regulatory regime for listed corporations more in line with overseas jurisdictions. We plan to introduce a bill into our Legislative Council to codify the disclosure requirements in the Securities and Futures Ordinance in this legislative session.”

“Another goal is to introduce a scripless securities market in 2013. Our regulators, led by the Securities and Futures Commission, have outlined details of this proposal. The government will lend support to the initiative by introducing the necessary legislative amendments. Paperless trading will improve the efficiency and competitiveness of our securities market. It will also help to enhance shareholder transparency and promote corporate governance.”

With regard to the insurance industry, Tsang disclosed that Hong Kong is proposing to establish an independent Insurance Authority. “Our aim here is to better protect policyholders and provide effective regulation on a par with international standards,” he said. “A public consultation exercise ended last month. We are now preparing detailed proposals taking into account the views received.”

Hong Kong also plans to establish a Policyholders' Protection Fund. It is expected that this will help improve insurance market stability and safeguard the interest of policyholders in the event of insolvency of an insurer.

Tsang also described measures that are proposed to aid investors, primarily through the relevant regulators stepping up their efforts to educate investors on the risks and strategies involved and through a plan to introduce a financial dispute resolution scheme. The latter would provide an impartial, speedy and affordable way to resolve monetary disputes between investors and financial institutions.

Lastly, he mentioned the action in hand to update Hong Kong’s company and trust laws. Having completed two phases of public consultations on the draft Companies Bill, the present aim is to introduce it into the Legislative Council early next year.

The Trustee Ordinance is also being modernized to strengthen, hopefully, the competitiveness of Hong Kong’s trust services industry. Relevant amendments to the Trustee Ordinance are being prepared and the aim is to introduce an amendment bill into the Legislative Council next year.

A comprehensive report in our Intelligence Report series giving a country-by-country analysis of offshore investment funds, stock exchanges and trusts, with an analysis of the US QI regime, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report9.asp
TAGS: investment | business | law | insurance | investment funds | corporate governance | legislation | Hong Kong | standards | regulation

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