Departing SFC enforcement chief a hard act to follow

PUBLISHED : Friday, 28 August, 2015, 1:55am
UPDATED : Friday, 28 August, 2015, 1:55am

It may sound trite to say Hong Kong's loss is London's gain. But that could prove true for investor protection if the Securities and Futures Commission is not successful in its global search for a successor who can fill the shoes of Mark Steward, its departing enforcement chief. Steward drew criticism as well as praise for his aggressive pursuit of market wrong-doers and using every legal means possible to compensate their victims. But he won lavish compliments from former SFC chief Martin Wheatley as the driving force in an unprecedented crackdown on illicit deals such as insider trading that has seen a procession of convictions and jailings.

Wheatley returned to England five years ago and eventually became chief executive of Britain's Financial Conduct Authority, which has now recruited Steward as its director of enforcement. Ironically, the latter will arrive as Wheatley departs, having been ousted at the end of his five-year contract because the government considers the authority needs new leadership in the continuing fallout from market misconduct since the global financial crisis.

Steward has carved out his own legacy in Hong Kong in the form of closer cooperation with mainland regulators aimed at foiling stock-market manipulators who think they can exploit gaps in cross-border regulation. He said this would prevent miscreants taking refuge, a welcome assurance amid extreme market fluctuations and worrying trading patterns in Hong Kong-listed companies with major shareholders from the mainland. The launch of the Stock Connect scheme linking the Hong Kong and Shanghai markets has given impetus for closer operational cooperation in enforcement.

It is to be hoped that the government and the SFC are not tempted to choose a successor with a less combative style. Steward may have ruffled the feathers of some people in high places. But officials should bear in mind that practices such as insider trading undermine market efficiency and transparency. Forceful regulation and cross-border cooperation are critical to maintaining Hong Kong's financial status.