The board of Hong Kong Exchanges and Clearing (HKEx) will fight to retain its role as the front-line regulator for listed firms. An HKEx director told the South China Morning Post yesterday the government's plan to shift regulatory duties to the Securities and Futures Commission (SFC) would block small firms from listing and hurt HKEx's profits. He said the exchange had decided to voice its opposition to the reform plan and lobby the government to rethink its proposals. HKEx chairman Charles Lee Yeh-kwong would send a letter to Secretary for Financial Services and the Treasury Frederick Ma Si-hang outlining its opposition. Mr Ma said yesterday he would discuss the reform plans with the HKEx and the SFC on Monday. 'It is the government's intention to implement the expert group's suggestions to improve the quality of the market. At the same time, we would also like to see a more active market. We want the investors to be able to actively participate while at the same time have reasonable protection,' Mr Ma said. A government-appointed expert group, chaired by Alan Cameron, released a report last Friday calling for the HKEx's regulatory function and its listing division staff to be transferred to the SFC. The HKEx director said: 'The HKEx board concluded it would be for the long-term benefit of Hong Kong's market for the exchange to retain the front-line regulator role.' He said all 15 board members, including the eight government appointees, had expressed reservations about the reform plans. 'A shift of the front-line regulator role from the HKEx to the SFC will not guarantee a better quality of listed companies, but it will definitely make it much more difficult for smaller firms to list. This will undermine the Hong Kong stock market's ability to act as a fund-raising centre and will drive companies away to overseas markets,' he said. The HKEx was also concerned the loss of listing fee income - 18 per cent of its total income last year - would hurt profit. It was understood the exchange appointed investment bank UBS Warburg to examine the impact of the reform on its profitability. The expert group report said HKEx's listing division staff lacked experience and members of its independent listing committee did not have enough time to attend meetings and vet documents. The HKEx director said the criticisms were unfounded and the HKEx would provide evidence to show the listing division and listing committee worked. Henry Wu King-cheong, legislator for the financial sector, supported the HKEx in its fight to retain its front-line role. Mr Wu criticised the government for not presenting the report to legislators. 'The expert group report is not acceptable. Its suggestions will not help improve the quality of companies. The government has been too hasty and irresponsible in accepting the report immediately after its release,' he said. Listing committee vice-chairman Moses Cheng Mo-chi, and Growth Enterprise Market listing committee chairman Lo Ka-shui also opposed the changes. Mr Lo had said many blue chips were small when they listed. An HKEx spokesman yesterday refused to comment on the HKEx board decision. The debate over the HKEx's regulatory role is likely to affect its appointment of a chief executive to replace Kwong Ki-chi who will step down on April 15.