Hong Kong Monetary Authority
The Hong Kong Monetary Authority (HKMA) was established in April 1993 by merging the Office of the Exchange Fund with the Office of the Commissioner of Banking. The HKMA is responsible for maintaining monetary and banking stability, including maintaining currency stability within the framework of the Linked Exchange Rate system under which the Hong Kong dollar is pegged to the US dollar.
SFC faces more flak over plan to buy property
Plans for the Securities and Futures Commission to buy its own office have drawn more fire from legislators, who say they are concerned that the regulator may spend too much on a luxurious new home.
At a meeting with lawmakers yesterday, the SFC disclosed in its revised budget that it was considering using part of its cash reserves to buy its own office instead of renting it.
The SFC had to resubmit its budget to lawmakers after they rejected its first submission last month, criticising it for refusing to cut the 0.003 per cent levy on stock trades despite having cash reserves of HK$7.4 billion.
The cash pile is sufficient to fund the SFC's operations for seven years. Under the law, it should consider cutting the levy if its reserves can support it for two years.
In its revised budget, the SFC has refused to cut the levy in case it buys a property. Instead, it proposes to waive licence fees for brokers, fund houses and investment advisers for the next two years from next month, which would cost it HK$332.4 million in income.
Chief executive Ashley Alder told the legislators that buying its own premises would save HK$180 million in rental expenses annually.
The regulator will review the transaction levy and its overall funding model after it decides on how to use its reserves, including whether to buy a property. A review would be completed in summer or autumn, Alder said.
'As a regulator, the SFC only needs a simple and basic office,' legislator Regina Ip Lau Suk-yee said. 'Since the SFC has huge cash reserves, it may choose to pay top dollar for a luxurious new office.
'The SFC should share the pain of other residents who are also paying high rents.'
In 2001, the Hong Kong Monetary Authority came under fire for spending HK$3.7 billion to buy 14 floors of Two IFC. The property's value doubled in a decade but also saved HKMA HK$734.4 million in annual rentals costs.
Ip said the SFC might follow the HKMA's example and select a high-end office.
Kam Nai-wai also opposed the SFC's plan. 'The SFC is a regulator and the levy and cash reserves are intended to support its regulatory function. I wonder if it's lawful for it to use reserves to buy property,' he said.
Kam also said the revised budget did not go far enough because the fee waiver only benefited brokers, not investors. 'This is unfair to investors,' he said.
Chim Pui-chung, who represents brokers, supported the SFC.
'The fee waiver will help financial firms cope with tough times,'' Chim said. 'If the SFC is buying its office, it will help save on rental expenses. The key issue is to make sure that the SFC buys a simple office, not a palace.'
Several other legislators accepted the SFC's refusal to cut the levy this year but have called on it to cut the levy next year if its reserves still exceed two years' operating costs.
The SFC can now seek approval from the financial secretary for its budget because the legislators did not reject the revised one.
Meanwhile, the SFC said it would set up a centralised unit to oversee risk management and strategy planning. It will be headed by Benedicte Nolens, who has been appointed as senior director of risk and strategy, and will report to Alder.
The Securities and Futures Commission's income, in HK$, in the nine months to December last year