Money Matters | Regulation accord shows through train is on track
Using Occupy as an excuse, vested interests were all for stalling the stock connect scheme but Beijing is making it clear it is not interested
By signing a bold accord that allows joint investigation between Hong Kong and mainland market regulators, Beijing is sending the world a strong message - it is not at all barricaded by the Occupy movement.
Any suggestion that the mother will delay or even dump the candy called the Shanghai-Hong Kong stock connect scheme to bring disobedient Hong Kong to its knees should now be squarely dismissed.
Joint investigation by the two regulators has always been crucial to the launch of the scheme that will allow investors in the two markets to trade each other's stocks. It has also been the most controversial aspect of the scheme.
Think about the businessmen who have borrowed factories from their friends to show the auditors, cooked their books, listed in Hong Kong, pocketed the money and then enjoyed the protection of the border to shield themselves from Hong Kong regulators. Think about the rife insider trading in Shanghai.
Under the current regulatory regime, which only carries general terms such as "mutual co-operation and assistance", the Hong Kong regulator can only ask its mainland counterpart to help in looking into the affairs of a rogue company, and then just sit and wait. The help may or may not ever come, depending on how many important friends the owners of the rogue company have, and how high their reach goes.
If this carries on, it was argued, what kind of protection could a foreign investor count on if it were to buy stocks that are regulated by mainland authorities?