The Securities and Futures Commission expects its reserves to exceed HK$7 billion by the end of next month - enough to fund its operations for five years. So there are no questions about where the money is coming from to recruit 51 extra staff, taking the total to 845. But the hiring spree has, understandably, prompted some lawmakers on Legco's financial affairs panel to question whether the SFC is hiring more people just because it has too much money to spend and to express concern about overregulation of the markets.
To be sure it is their job to watch over funds raised by regulation, and the city still lives by the principle of small government with a light regulatory touch. That said, there is support in the market for enforcement of corporate governance standards by the watchdog that boosts investor confidence.
This is not the first time that the SFC has had to defend itself. It follows the exposure of tensions with the Department of Justice over its right to prosecute, with critics arguing that if this was left to government prosecutors it would provide a necessary check on a regulatory and investigative agency with extensive coercive powers. More recently it has been involved in controversy over mainland e-commerce giant Alibaba's failed bid to list here with a dual share structure giving its founder and senior executives control over the board, and the implications for the city's global competitiveness.
Such high-profile cases do not give a picture of day-to-day activities in investor protection. The watchdog increased the number of fines and prosecutions by nearly 50 per cent last year while compliance with the city's corporate governance code among Hang Seng Index and Hang Seng Composite Index companies fell to the lowest level since it was launched in 2006.
SFC officials told lawmakers extra staff were needed to speed up investigations and a new team would be set up to regulate the stock exchange, now a more complex business after it acquired the London Metals Exchange.
There may be room for debate about whether our listing rules are in line with the times. But this does not mean the city needs to lower its standards to attract new listings or to avoid discouraging listing candidates. Indeed, the other side of the coin is that higher standards attract institutional investors, smoothing access to capital. Regulators must strike a balance. Governance standards remain paramount to the city's status as a financial hub.