'The [Securities and Futures Commission] already faces a lot of checks and balances such as the Process Review Panel, the appeals tribunal and judicial reviews. It is not necessary to add more scrutiny. 'It is absolutely not essential and unnecessary to set up a regulatory decision committee to check the new fining power of the commission.' SFC chairman Andrew Sheng IMAGINE YOURSELF A shopkeeper in a hypothetical country that we shall call Regulatoria. A shopper comes in one day and asks you what you think of the prices you are charging. 'Very good value,' you say and convince him to buy several items that you have overpriced. It is his problem, however. Buyer beware. You did not force him to buy these items and you hardly feel obligated to tell him that he could get them cheaper tomorrow or cheaper today just down the road. Next thing you know, you have a Regulatorian policeman confronting you in your shop. 'Show me your shoppers advisor's licence,' he says. 'You have just committed an offence. You have charged an inappropriate price.' 'Oh, that's a new one on me,' you say. 'Who wrote that rule?' 'I did,' says the policeman, producing a weighty manual of several thousand pages. 'I've got it right here. Let me see now, yes, here we go, section 231, subsection 16, paragraph 28(b), sub-paragraph 7(c)(2). We issued it as a practice note just yesterday on our latest amendment of the code. You'll have to come with me.' 'Hold on,' you say. 'This is a matter of subjective judgment. Who says it was an inappropriate price?' 'I do,' says the policeman. 'I know these things better than you do. My rulebook says I do and don't try to tell me otherwise. Now come along with me. We're taking you straight to trial.' You then find yourself standing in the dock of a rather unusual court. There is no judge on the bench. This does not deter the policeman, however. He reads the charge, tells you that you can now say your bit and, when you have done, he moves over to the bench, pulls a wig over his head and says: 'I pronounce you guilty. Your shopkeeper's licence is herewith suspended for six months and I impose a fine of $1 million.' He then takes the wig off, steps away from the bench, pulls out a receipt book and, pen in hand, says: 'Right then, let's have your cheque.' 'Wait a moment,' you say. 'This is unfair. You have made yourself rule maker, rule interpreter, rule enforcer, prosecutor, judge, jury and jailer all in one. Are there no checks and balances on your powers in this system?' 'Of course there are,' says the policeman. 'The system is regularly reviewed. I do it myself. I also allowed you this hearing and I have given you my decision in writing. Even the Hong Kong government agrees that this provides for a 'fair and transparent decision making process'. Just look up its latest SFC consultation paper on the matter. 'What is more, I shall allow you to appeal my decision to an appeals tribunal that I have appointed. In the meantime, however, we are closing down your shop for six months and, if this happens to ruin your career, well, it has nothing to do with me. Now let's have your cheque.' So much for Regulatoria. SFC Land has a good number of its hallmarks. I can fully appreciate that regulation of our financial markets will be made more time-consuming, costly and difficult if regulators are to have a set of watchdogs placed over them to ensure that they do not abuse their powers. It is equally true of the police, however. The quickest, easiest and cheapest way to clear crime off our streets would be to give our policemen powers to pick up their suspects and clap them straight into jail without any more fuss or bother. Quite a number of countries do it exactly this way. We do not. Our society values due process. If you are charged with robbery, you get checks and balances all the way to ensure that you will not be punished unless you are independently proven guilty beyond a reasonable doubt. Why then do we not extend to our financial markets the benefits of a system of justice available to every common criminal? Andrew, it is all very well that the SFC should be able to do an efficient job of maintaining clean markets in Hong Kong, but if the only way of doing it is through betrayal of the civil rights and privileges that make ours a sophisticated society, then it is not worth the price you want us to pay. We need to make sure Regulatoria remains a hypothetical country.