The Securities and Futures Commission (SFC) is to work with the Corporate Finance Association to introduce a code of conduct for merchant bankers and financial advisers. The SFC will also work with the association to simplify listing prospectuses and public announcements issued by listed companies. SFC executive director Laura Cha said yesterday two working groups would be set up to deal with the two issues. She hoped the code of conduct would make merchant bankers more aware of the importance of self regulation. She said last year it was discovered that some merchant banks had new staff whose knowledge of Hong Kong corporate regulation was inadequate. The code of conduct would help ensure they perform in a professional way, she said. Another working group will focus on the language and the information disclosed in listing prospectuses and public announcements. 'Listing prospectuses are getting too long and too complicated,' Ms Cha said. 'It is hard to make sure investors are aware of the most important information. 'Public announcements are usually not written in simple English. 'Sometimes even the lawyers complain they are too hard to understand, so how can investors understand them?' Another task for the SFC this year would be to focus on the mechanism for issuing new shares. Ms Cha said that while merchant bankers and issuers appeared to be satisfied with the system of book building since its introduction in 1994, retail investors and local brokers were not of the same view. They complained it was too hard for them to get new shares because a large portion of new shares issued were privately placed through book building and only a small portion was left for the public. Ms Cha confirmed the proportion reserved for the public in new issues last year had fallen from more than 20 per cent of total offerings in 1994 to only 10 per cent last year. She said the SFC wanted to ensure that proportion was enough to meet the demands of brokers and investors, but the SFC did not want to lay down a specific proportion of shares to be offered to the public for fear of inflexibility.