Legislators have urged the Government to set up two consultation panels to curb the power of the Securities and Futures Commission. They want the government to follow the example of Britain where the regulator must consult two independent panels before making any changes to existing rules. Legislators say this is necessary because the controversial new Securities and Futures Bill would give the SFC too much power. Brokers and legislators have expressed concerns that the bill, which would allow the SFC to penalise banks for securities malpractices, would also empower it to make certain breaches of law a criminal offence. Anyone who breached these rules could face a heavy fine or imprisonment. The new bill does not require the SFC to consult the market before making such rules. Although some overseas regulators have the power to make rules, there are a number of safeguards on misuse of that power. Legislators Margaret Ng Ngoi-yee and Sin Chung-kai said the Government should expand the bill to include the formation of two consulting panels - one comprising professional industry players such as bankers, brokers and lawyers, and the other consumers. The two panels would meet regularly to comment on the operations of the SFC, which would need to consult the panels before changing any rules. The proposals are to follow the example of the Financial Services Authority (FSA) of Britain, which under the law must first consult the two panels before it makes any rule changes. If the FSA does not accept the suggestions made by the consulting panels, the law also requires it to explain to the public the reasons for the rejection. 'The Securities and Futures Bill empowers the SFC to make rules but it does not require it to consult the market first,' Ms Ng said. 'This would potentially allow the SFC to abuse its new power.' Legislator Audrey Eu Yuet-mee supports the proposal on setting up the panels and adding them to the bill, saying it would ensure the SFC sought outside opinions before making any alterations to the rules. However, Tsang Yok-sing, chairman of the Democratic Alliance for the Betterment of Hong Kong, said it would be better to allow the two panels to be set up informally. 'After the panels have been proven to run effectively, the Government could then add them to the law,' he said. The bill, when it becomes law, will replace the existing 10 securities regulations and includes sections on Internet trading, insider dealing, and the securities business of banks. Legislators have postponed a vote on the bill scheduled next month until the end of the year to allow them more time to conduct a review.