SFC calls for reform to battle coming challenges
Hong Kong's securities laws need to be reformed quickly due to rising competition with neighbouring markets and the challenge of China's impending entry into the World Trade Organisation, according to the Securities and Futures Commission (SFC).
In a government paper to legislators, the SFC said the laws needed to be reformed soon.
'As Australia and Singapore deregulate, the competition is intensifying,' the paper said.
'Further, with the mainland opening up with its accession to the WTO, Hong Kong can no longer take for granted the business it attracts as the 'gateway' to the mainland.'
Australia and Singapore have reformed their securities markets in recent years, while their stock exchanges have demutualised and become listed companies.
They also plan to consolidate their securities laws under a single set of regulations covering all financial markets.
Next month, Singapore will remove stockbrokers' minimum commission system. Hong Kong will do this in April 2002.
Such moves by Australia and Singapore could threaten Hong Kong's position as the second-largest Asian financial market outside Japan.
As a result, the SFC urged legislators to support the Securities and Futures Bill to strengthen competitiveness.
'Reforms such as those imposed in the Securities and Futures Bill . . . are not only good for Hong Kong investors and intermediaries but are imperative for Hong Kong to maintain its position as the favoured financial centre . . . for the rest of Asia outside Japan,' the SFC said.
The bill, at present under review by legislators, would consolidate and replace the existing 10 securities ordinances. It would also add new regulations such as empowering the SFC to regulate Internet trading; make insider dealing a criminal offence; and tighten the regulations concerning the securities business of banks.
The Government had hoped legislators would pass the bill in April.
However, the bill's complicated nature means this deadline is set to be missed, the legislators said.
The SFC also said quick passage was needed as the securities law was outdated.
Hong Kong's securities law, at more than 20 years old, contains no provisions for electronic trade.
The bill will plug this loophole allowing the United States model on electronic trading networks to be brought to Hong Kong, the SFC paper said.