THE applause the Securities and Futures Commission has won for its proposal to reduce the disclosure of interests threshold is richly deserved. If approval is won to lower the level from 10 per cent to five per cent it will, in a single stroke, boost transparency and elevate Hong Kong's standards on this matter to those generally accepted in international markets. The SFC's move forms part of a long overdue attempt to rationalise securities legislation and tidy up the mess of ordinances it inherited at birth in 1989. There is a vast amount of overlap and possibly conflicting regulation in these ordinances, which makes the task of policing a rapidly evolving market difficult and potentially confusing for interested parties. There is clearly a sense of urgency within the SFC at the moment to complete the rationalisation process ahead of the July 1997 handover to China. The fact that it could take at least 12 months to push the alteration to the disclosure rule through the legislative process does not instil confidence that such a timetable will be kept, especially as some of the other changes could prove more controversial. That said, it is a welcome move and one which shows that the SFC is determined to fulfil its function to create a more informed market for domestic and international investors. There were, predictably, protests from the laissez-faire group, for whom regulation equates with interference. Images were invoked of people leaving Hong Kong to do business in other Asian centres less burdened by regulations. The question is, which markets? Singapore and Malaysia, Hong Kong's regional rivals, have a five per cent threshold, while other markets in the area are also looking at lowering the level. China's fledgling regulatory structure contains a five per cent threshold. The US, Hong Kong's biggest foreign influence, has a five per cent level while the UK has moved to three per cent. The alteration would be particularly welcomed in new issues, where the public receives a relatively small slice of the shares, typically 25 to 30 per cent, in a family controlled company. With the threshold at 10 per cent there is vast scope for manipulation of the share price between parties linked to the controlling family. There have been numerous recent examples of this which have rendered the listings as nothing more than nominal. In companies with a more broadly based shareholder structure, a five per cent disclosure would allow the market to be better informed of an impending bid when a threatening holding is being amassed. This should be especially welcomed by institutional shareholders. Hong Kong has thrived and matured in a mildly regulated environment. This change will help to ensure that this continues.