OpinionExchange duplicates SFC’s regulatory role

Now that the Securities and Futures Commission has declared it will enhance its role as a corporate regulator, what role should Hong Kong Exchanges and Clearing play in regulating listed companies?

Traditionally, the city's regulatory system has been divided into three layers, with the government setting the law and policy, the SFC carrying out enforcement and detailed investigations into market malpractices, and the stock exchange acting as a front-line regulator and monitoring listed companies.

Since HKEx became a listed company in 2000, there have been calls to review whether the exchange should continue to play its traditional role.

As a profit-driven company, HKEx naturally wants as many companies as possible to list on the exchange. However, this is in conflict with its role as a regulator because if it takes a hard line it may drive away potential clients.

But of course HKEx would not like to abandon its regulatory role, because if it did, the companies listed on the exchange would not take it seriously.

At HKEx's results announcement on Wednesday, chief executive Charles Li Xiaojia reiterated the exchange's role as a regulator for listed companies.

Last year, HKEx vetted 41,726 company announcements and handled 453 complaints against listed companies.