Stockbrokers have welcomed a Legislative Council subcommittee report's call for a single body to regulate the investment market.
However, bankers oppose any change from the status quo in which the Securities and Futures Commission (SFC) supervises brokers, and the de facto central bank oversees financial institutions.
The Legco report suggests the SFC replace the Hong Kong Monetary Authority as regulator of banks' securities departments.
The subcommittee spent three years studying the alleged improper selling by banks of risky minibond products issued or guaranteed by Lehman Brothers. When the US investment bank collapsed in September 2008, the products became almost worthless, sparking complaints to the HKMA and SFC from more than 30,000 investors that they were not told of the inherent risks.
'This is a fantastic idea. For decades, the stockbroking industry has urged the government to let the SFC regulate banks' securities departments, because the HKMA has adopted a less stringent approach than the one that the SFC imposes on brokers,' said Jojo Choy Sze-chung, chairman of the Institute of Securities Dealers.
'The minibond fiasco showed that we had grounds for complaint. Letting the SFC regulate bank securities departments is fair and will improve investor protection.'
Brian Fung Wei-lung, chairman of the Hong Kong Securities Association, said making the SFC the sole regulator would prevent regulatory gaps and confusion. 'The current regulatory model is confusing for investors,' Fung said.
