Almost a year has passed since a landmark deal saw 10 top US securities companies agree to pay US$1.4 billion to settle a probe into allegations of abuse by their market analysts. While the claim by New York Attorney-General Eliot Spitzer, who led the inquiry, that the agreement would 'permanently change the way in which Wall Street operates' may have been overstated, concern about conflicts of interest among analysts has led to a push for reform around the world. New rules and guidelines have been adopted to guard against investors being misled by biased research. Hong Kong, as is often the case, has not rushed to bring about changes. The Securities and Futures Commission (SFC) has preferred to proceed cautiously, sounding out opinion here and monitoring the overseas developments. But this measured approach is gradually moving the debate in the right direction. We learned this week that two surveys carried out by the SFC show support among securities companies, analysts and investors for tougher rules. Proposals will be released by the SFC for public consultation early next year. One key area of concern is the link between analysts working for securities companies and the corporate finance divisions of those firms. This was at the heart of abuses that caused investors huge losses in the US, contributing to a massive drop in confidence in the market. Analysts were providing glowing reports on companies targeted by their firm's investment banking operations for lucrative business. In the most extreme cases, evidence was disclosed of analysts recommending stock which, privately, they were scorning. The US settlement involved companies agreeing to adopt stricter practices aimed at, among other things, severing market research operations from those involved in corporate finance. Funds were also provided by the 10 companies concerned to subsidise independent research firms picked for the quality and performance of their reports. Hong Kong has not experienced the conflict of interest scandals that afflicted America during the market boom in the late 1990s. But the potential was - and is - clearly there. Our existing rules are vague and open to abuse. It is time to get to grips with the problem. The reform exercise will need to be handled delicately. Too much regulation could lead to analysts being starved of information and affect the quality of their research. And if analysts are not to receive their compensation from investment banking operations, then alternative sources will have to be found. But these considerations should not be allowed to stand in the way of providing investors with better protection. It is vital that Hong Kong, as an international finance centre, maintains the highest standards and keeps up with global trends.