Five notices made to bring the new regulatory regime introduced under the Securities and Futures Ordinance (SFO) and the Banking (Amendment) Ordinance 2002 (BAO) into full operation on April 1, 2003 are gazetted today (January 17).

A Government spokesman said, "The SFO should commence as soon as possible to bring into effect the various improvements it introduces. Those improvements seek to enhance the regulation of market intermediaries, level the playing field between brokers and banks in their conduct of securities business, facilitate market innovation, improve the investor compensation arrangements, and enhance the transparency and accountability of the Securities and Futures Commission (SFC)."

"Under the new regime, there will be greater efficiency and effectiveness in combating market misconduct and greater market transparency."

The spokesman pointed out that the SFC and the Hong Kong Monetary Authority (HKMA) have been engaging the stakeholders intensively to prepare them for the new regime.

"The SFC and the HKMA have trained their staff and modified their system for implementing the new legislation. They are working with the industry to facilitate compliance," he said.

"To ensure the smooth cooperation between them in regulating the securities business carried out by banks, the SFC and the HKMA signed a new Memorandum of Understanding (MOU) on December 12, 2002," he said.

"Also, a revised MOU between the SFC and the Hong Kong Exchanges and Clearing Limited to implement the new regime is expected to be signed by the end of this month," he added.

"Since the enactment of the SFO, the SFC has organised or participated in 37 familiarisation seminars and training sessions on the SFO for more than 7,900 intermediaries and other market participants. More seminars or training sessions on the subsidiary legislation under the SFO will be arranged."

"The SFC and the HKMA are issuing codes and guidelines to explain in detail how they will administer the new regime. The SFC will publish various non-legislative forms to further facilitate compliance with the new regime. Both the SFC and the HKMA stand ready to give guidance to individual market participants and help them overcome genuine compliance difficulties."

The SFO was enacted in March 2002. It consolidates and modernises 10 existing ordinances governing the securities and futures markets into a composite piece of legislation to keep the Hong Kong regulatory regime on a par with international standards and practices. The amendments introduced under the BAO are to supplement the SFO for regulating the securities business carried out by banks and their staff. A total of 38 sets of subsidiary legislation made to supplement the regulatory framework laid down under the SFO have been gazetted.

Among the five notices made by the Secretary for Financial Services and the Treasury are the Securities and Futures Ordinance (Cap.571) (Commencement) Notice 2003 and the Securities and Futures Ordinance (Cap.571) (Appointment of Day- Repeal of Ordinances) Notice, which seek to appoint April 1, 2003 as the commencement day for SFO and the day on which the existing ten ordinances (including the related subsidiary legislation) consolidated under the SFO shall be repealed.

The other three notices are the Securities and Futures Ordinance (Cap.571) (Appointed Day-Unified Exchange Compensation Fund) Notice, the Securities and Futures Ordinance (Cap.571) (Appointed Day-Futures Exchange Compensation Fund) Notice, and the Banking (Amendment) Ordinance 2002 (6 of 2002) (Commencement) Notice 2003.

The first two Notices appoint April 1, 2003 as the appointed day when the new investor compensation arrangements under the SFO shall replace the existing arrangements in respect of compensation claims arising from relevant defaults committed on or after that day; and when the process to wind up the existing Unified Exchange Compensation Fund and Futures Exchange Compensation Fund begins.

The Banking (Amendment) Ordinance 2002 (6 of 2002) (Commencement) Notice 2003 appoints April 1, 2003 as the day on which the BAO shall come into operation.

End/Friday, January 17, 2003

NNNN