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Following is the remarks (English only) delivered by the Financial Secretary, Mr Antony Leung, at the 2nd Anniversary Cocktail Reception of the Hong Kong Exchange and Clearing Limited (HKEx) today (June 20):

Ladies and gentlemen,

I am truly glad to be here at this reception for celebrating the 2nd Anniversary of the Hong Kong Exchange and Clearing Limited.

The merger and listing of HKEx provides a platform for HK to further promote our financial markets. I understand that in the past two years HKEx has embarked on a number of initiatives to enhance its infrastructure, diversify its product base, modernize its rules, and forge closer relationship with other exchanges. But this is only a beginning, and much more has to be done.

For Hong Kong's financial markets to flourish it is most important to ensure that both issuers and investors have confidence in our markets. This hinges on our regulatory framework, the quality of our enforcement work and the efficiency and reliability of our trading infrastructure.

The world is moving fast and we have to stay at the forefront to maintain our leading edges as an international financial center. We have been doing a lot to ensure that we continue to have a modern regulatory framework of international standards: we have just enacted the Securities and Futures Ordinance; our accounting standards are being harmonized with IAS; our Standing Committee on Company Law Reform continually reviews our companies law and recommends necessary improvement measures.

SFC and HKEx are working closely together to further enhance the quality of regulatory enforcement. For example-

* the SFC has recently put forward a proposal to require dual filing of offering and listing documents which seeks to ensure appropriate regulatory oversight while maintaining efficiency;

* the HKEx has completed a consultation on corporate governance and will introduce improvement measures shortly; and

* the HKEx will shortly put forward another consultation paper on delisting mechanism to improve the quality of the market.

Our overall objective must be to ensure quality regulatory and enforcement work, and hopefully in a user-friendly manner.

We already have a very efficient financial infrastructure but we are determined to make it even better and more user-friendly. Scripless trading and automatic straight through processing are some of the projects in hand. The Government will continue to work closely with HKEx, SFC and HKMA to ensure that we have an efficient system catering to our future needs. At the same time, as I have discussed with Charles some time ago, we will also ensure that we have a versatile and robust system that is both flexible and reliable.

Lastly, HKEx should look at itself not only as a Stock Exchange for Hong Kong. It must aspire to become the Stock Exchange of the region, including the Mainland of China. In a way, it is already heading in this direction but I would like to see it move ahead even further and faster. As I said previously, we have been discussing various proposals with the Mainland of China, but at the same time I would urge the HKEx to continue to explore other possibilities in the Mainland and in the region as well.

Financial services is one of the leading sectors I attach a lot of importance to. I am confident that with the joint efforts of market participants, HKEx, the regulators and the Government, we can further enhance our attraction as the leading international financial center in the region.

Finally, I congratulate HKEx on its 2nd Anniversary and wish it every success in the coming years.

End/Thursday, June 20, 2002

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