THE Hong Kong Monetary Authority and the Securities and Futures Commission (SFC) have signed a memorandum of understanding aimed at strengthening co-operation between the two bodies. The memorandum allows both authorities to co-ordinate supervision of financial institutions where they both have an interest. The two bodies said they would seek to ensure there were no gaps in regulation and no unnecessary duplication of supervision. 'The trend for financial institutions and groups to broaden the range of their business activities has increased the need for the various financial regulators to work closely together,' said Monetary Authority chief executive Joseph Yam Chi-kwong. SFC chairman Anthony Neoh said the memorandum would help the two bodies to work even more closely together to improve investor protection and to preserve market integrity. The banking and deposit-taking business of authorised institutions is governed by the Banking Ordinance and regulated by the authority. The SFC and related ordinances govern securities dealing and the giving of investment advice. The SFC and the authority said the memorandum enshrined the main recommendations of a working party set up late last year to look into ways of minimising gaps and overlaps in their supervision. Among the provisions were the appointment of a co-ordinator for institutions or financial groups where both bodies had an interest. The co-ordinator would help both exchange information relevant to an institution's financial position, and the fitness and integrity of its management and other matters. The memorandum also provided for consultation in staff training, issuance of guidelines and formulation of policy in areas covering securities, futures, fund management and leveraged foreign exchange trading. The two bodies said they had also agreed to meet every six months to swap information on financial institutions under dual supervision and to meet every two months to discuss current and general policy issues. They said both sides had agreed to inform the other before taking any disciplinary or regulatory action against an institution in which they had a common interest.