The search for a suitable replacement for Anthony Neoh as Chairman of the Securities and Futures Commission is proving more difficult than originally anticipated. While overseas candidates are queueing up to be considered, suitable local contenders are notable by their absence. On one count, that should not be too much of a surprise. Any foreign regulator hired to fill the post can expect to earn far more than would be the case back home. But for those already working in the upper echelons of Hong Kong's financial services industry, the $5.6 million salary would be well below their present remuneration. The problem is similar to the one that has long plagued efforts to persuade successful local lawyers to become judges, given the reluctance to take the pay cut this involves. In such circumstances, there should be no hesitation about hiring an overseas successor to Mr Neoh, if no qualified Hong Kong candidate can be found. While localisation is important, it must not take priority over the need to find an experienced and well-qualified person to fill the post, especially after the way in which the collapse of Peregrine Investment Holdings and CA Pacific exposed loopholes in the local regulatory regime. As Hong Kong begins to come out of the financial downturn, it is more important than ever to appoint someone who has the confidence of international markets. But the SFC should never have allowed itself to be placed in a position where a choice has to be made between experience and local knowledge. In an ideal world, a Hong Kong appointee would clearly be far preferable. Proficiency in Chinese would be a major asset, particularly in dealing with red chip listings and forging closer ties with mainland regulators. Given the well-known difficulties in attracting anyone from the private sector, more effort should have been made to groom internal candidates. It is here that the SFC has failed. For years, civil service succession plans have ensured that local officers were given the training needed to fit them to fill all top government posts. The Hong Kong Futures Exchange last year appointed an expatriate as Chief Executive on the understanding that a local would be his successor. The SFC has no such succession plans. If Mr Neoh is replaced by an overseas appointee, only one of its five executive directors will be Hong Kong-born and bred. That is an unhealthy balance. Whoever is appointed must do far more to develop long-term localisation.