Press Release
Legislative Reform for the Securities and Futures Market
Monday, July 5, 1999
The Government launched a consultation exercise on the major legislative reform proposals for the securities and futures market today (Monday).
"Hong Kong needs to have a modern and flexible regulatory framework to strengthen our competitive edge amidst rapid changes in the international financial markets," Mr Rafael S Y Hui, the acting Financial Secretary said, "A reform to our existing legislation governing the securities and futures markets is urgently needed."
The legislative reform marks the first of a series of reforms to the market announced by the Financial Secretary in his Budget Speech in March.
The proposals will be enshrined in a composite Securities and Futures Bill which seeks to consolidate and update nine ordinances governing the securities and futures market. They have been prepared in the light of the experience of the Securities and Futures Commission (SFC) in enforcing these ordinances over the years, and in response to comments from the market and the general public.
"The proposed Bill will aim to provide a regulatory framework which is on a par with international standards and promotes a fair, orderly and transparent market. The framework will be administered by an accountable and transparent regulator. It will facilitate the development of new financial products and effective trading systems," Mr Hui said.
Major proposals in the legislative reforms include promulgating clear regulatory objectives for the SFC, introducing new checks and balances on the SFC, enhancing its investigatory and disciplinary powers to minimise market misconduct, streamlining of licensing regime for intermediaries to facilitate more effective regulation, and promoting quality disclosure for investors to make informed decisions.
"The proposed Securities and Futures Bill will seek to provide for a modern regulatory framework to prepare ourselves for the new Millennium," said Miss Au King-chi, Deputy Secretary for Financial Services.
"Major stakeholders in the market will benefit from a more competitive and attractive securities and futures market," she said. "Investors will have better protection with more effective measures to combat market misconduct and fairer access to price-sensitive information. Intermediaries will benefit from a streamlined licensing regime and more equitable disciplinary system.
"With more and better quality disclosure, investors will find our market more attractive, which will in turn attract more issuers to use our market. All these will help promote growth of listed companies and the economy in general," she added.
"The Government has been working closely with the SFC as a team in identifying ways to improve the regulatory regime for the market," Miss Au said. "We have received valuable contributions from the SFC in preparing the legislative proposals."
"Together with the SFC, we look forward to working with the market in reforming the regulatory framework for the securities and futures industry," she continued. "This is part of our continuous drive to strengthen our position as a pre-eminent international financial centre in the Region."
The proposed Bill is scheduled for introduction into the Legislative Council by December this year. "In view of the tight legislative timetable, we are consulting the public and the market on the key proposals to be included in the Bill while drafting the Bill, so that we shall be able to take into account public comments in preparing the draft Bill," she explained.
Consultation papers have been issued to professional and trade bodies, market organisations, chambers of commerce and other relevant bodies for comments. Detailed information on major proposals to be included in the proposed Bill is available at the website of the Financial Services Bureau at for English and for Chinese version.
Comments from the public are welcome and shall reach the Bureau by August 6, 1999 either through e-mail to "" or mail to Special Duties Division, Financial Services Bureau at 18/F, Admiralty Centre, Tower 1, 18 Harcourt Road, Hong Kong.
The main proposals under the legislative reform for the securities and futures market are set out in the section below.
Major Proposals
Under the Legislative Reform for the
Securities and Futures Market
Regulatory Objectives
The proposed Securities and Futures Bill will seek to stipulate clear regulatory objectives for the SFC. These will provide a set of benchmarks by which the public and the industry could measure the performance of the SFC.
Checks and Balances
To ensure adequate checks and balances which will be commensurate with the enhanced regulatory powers proposed for the SFC, the Governme

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