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The following is issued on behalf of the Expert Group to Review the Operation of the Securities and Futures Market Regulatory Structure:

Following is the opening statement by Mr Alan Cameron, Chairman of the Expert Group to Review the Operation of the Securities and Futures Market Regulatory Structure at the press conference held by the Expert Group today (October 9).

Ladies and Gentlemen,

As you may be aware, the Financial Secretary announced on September 26 the appointment of an expert group to:

* review the roles and functions of the Government, the Securities and Futures Commission and the Hong Kong Exchanges and Clearing Limited on matters relating to the listing of securities and the governance of issuers with listed securities;

* review the lines of communication among the above three;

* review the operation of the regulatory structure regarding listing matters;

* recommend changes and improvements relating to the above issues; and

* use its best endeavours to submit its report before the end of March 2003.

I am pleased to accept the challenge and to take part in this important review as the Chairman of the Expert Group. First of all, let me introduce myself. I served for eight years as the chairman of the Australian financial markets regulator, called the Australian Securities Commission and later re-named the Australian Securities and Investments Commission (ASIC). I was in that position during the demutualisation and self-listing of the Australian Stock Exchange, a process which put the issue of the future regulatory role of a listed stock exchange firmly on the agenda. Since I left ASIC towards the end of the year 2000, I have continued with my interest and work in matters of financial regulation, including speaking and advising on this and similar issues in various countries. I believe I can claim therefore to have a good understanding of the structure and operation of the major securities and future markets around the world. I have learned that "nothing endures but change" in the securities and futures sector. The regulatory structure and operating system of the industry must keep on updating itself to keep pace with the ever changing and increasing demand it encounters. My involvement in this work is personal. The Sydney Futures Exchange, of which I am a non-executive director and Deputy Chairman, is not involved, and does not raise the same issues because it is purely a futures exchange, and does not have listed companies as such.

I would like to introduce the other two members of the Group, Mr Peter Clarke and Dr Raymond Ch'ien. Mr Clarke was the former Chairman of Merrill Lynch Asia Pacific, and has more than 30 years of experience in financial services in New York, London and Tokyo, as well as in Hong Kong. He has numerous public service affiliations in Hong Kong including since 2000, the Chairman of the Advisory Committee on Human Resources Development in the Financial Services Sector. Dr Raymond Ch'ien, who has extensive knowledge in financial services and was a member of the Executive Council, requires no detailed introduction. The three of us will make our best efforts to complete the review in full accordance with the terms of reference given us by the Financial Secretary.

In the next few minutes, I would like to explain our work plan and the scope of our work.

Our Work Plan

As clearly stated in our terms of reference, we will conduct wide consultation with all stakeholders. We welcome submissions and comments from all interested parties and members of the public on the subjects of our review.

* Tomorrow, we will publish advertisements in leading newspapers on financial matters in Hong Kong and in the region inviting views and comments. In view of the time constraint, we hope that the submissions be sent in no later than November 20, 2002, which is six weeks from now.

* Over the next few months, we will communicate with representatives of issuers, financial intermediaries, service providers, investors, both institutional and individual, and Legislative Councillors. We will do this by exchanges of correspondence, visits and meetings.

We will of course take into account the situation of the local and global markets. There is already a rich repertoire of information on the systems of various markets, and their merits and weaknesses. We have already started preliminary work on collecting and compiling information using the well-established channels as well as our personal networks. We will consider global trends regarding the regulation of securities and futures markets and to what extent our markets in Hong Kong should follow suit.

I was able to cut short an earlier commitment elsewhere and fly to Hong Kong at short notice for our first meeting on 5 October 2002. However, since that was a Saturday and I could only stay in Hong Kong for a brief period because of my other commitments, it was not possible for us to conduct a press conference during that time. But thanks to technology, we are able to overcome the geographical barrier and conduct our press conference today.

We have already agreed on a tentative work plan. We expect to have working meetings in Hong Kong every month. Between the meetings, we will communicate through various means, for instance, by video link, email and telephone. We have a full-time Secretariat staffed by civil servants. We can be reached via the Secretariat any time during the six-month review.

We have broadly divided our work into three stages. In the first stage, we are basically in a listening mode. We will collect views, comments and information on all matters relating to our work. In the second stage, we will evaluate different views and identify key issues. In the final stage, we will formulate our views and recommendations, and prepare our report.

In the next few rounds of meetings, we will conduct visits to relevant institutions and meetings with key stakeholders, including the Government, the Hong Kong Securities and Futures Commission, the Hong Kong Exchanges and Clearing Limited, some listed companies, financial intermediaries and shareholder groups, both institutional and individual.

Scope of Our Work

We believe our terms of reference have stated clearly that our focus will be on listing matters and the governance of listed companies. This area is large enough to engage the three of us and the Secretariat until the end of March next year. That said, if, during the course of our work, we receive submissions on areas not entirely within our terms of reference but of sufficient importance, we will, without doubt, flag these issues for consideration by the Administration in the future.

Our objectives are clear. We aim to draw up recommendations that will increase the effectiveness, efficiency, clarity, fairness and credibility of the regulatory system, and ensure the quality and integrity of the markets and the proper protection of the investing public. We believe that all these will be conducive to the future development of the Hong Kong markets.

Final Remarks

We see ourselves as facilitators. We can never discharge our responsibilities unless with the full support and collective wisdom of the community of Hong Kong. The review is, after all, a review of the system in Hong Kong and for the benefit of Hong Kong.

I am now ready to take a few questions.

End/Wednesday, October 9, 2002

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