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Enoch Yiu

Banks will have to provide their securities' dealing details to the Hong Kong Monetary Authority (HKMA) twice a year.

The new ruling is part of the authority's efforts to tighten regulation of banks' securities business, and level the playing field for banks and brokers.

Brokers have been complaining banks have less of a regulatory burden. Brokers' activities are regulated by the Securities and Futures Commission but banks are exempted from these regulations, being controlled by the HKMA. Bank employees are also outside the SFC-imposed code of conduct which is used to regulate brokers' staff.

However, an SFC survey two weeks ago showed banks last year had 40 per cent of Hong Kong's securities underwriting business.

As a result the HKMA moved to tighten its regulations on banks' activities in the area.

It yesterday told all Hong Kong's banks the new reporting requirement would give it the information needed to enable it to 'facilitate supervision of such activities'.

Included among the new HKMA reporting requirements are obligations to indicate the number of clients banks have in their securities and margin dealing activities; volumes of local and overseas transactions; income from securities business; the number of their branches involved in the securities business; and they way the trading is conducted.

Banks will have to submit their first reports to the HKMA before January 31 - covering their securities dealing activities for the period from July 1 to the end of the year.

Subsequent returns are to be submitted within 21 days of the end of June and December each year.

The HKMA will ask the Legislative Council this month to amend the Banking Ordinance to introduce the additional regulations covering banks' securities business activities.

The proposed law change will enable the HKMA to check the daily operation of banks, and allow it to publicly reprimand the banks and their staff should they have damaged the interests of any of their securities clients.

It has been unable to do this, for fear it could shake the public's confidence in the banks, but the Government considers this ban is out of step with the times.



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Hong Kong Monetary Authority (HKMA)

Securities dealing details need to be revealed regularly