FINANCIAL AND MONETARY AFFAIRS
industries operate. Provisions are also in place in these ordinances providing for the investigation of malpractices as well as compensation arrangements for investors.
The SFC, established as an autonomous statutory body outside the Civil Service, has 12 directors (half of them executive) appointed by the Chief Executive of the HKSAR. It must present the Financial Secretary with its annual report, budget and an audited statement of its accounts, which are also required to be laid before the legislature.
The SFC seeks advice on policy matters from its Advisory Committee, which has 12 independent members. They are appointed by the HKSAR Chief Executive and are broadly representative of market participants and relevant professions. Decisions relating to matters concerning the registration of persons and intervention in their business are subject to appeal to the Securities and Futures Appeals Panel, the members of which are also independently appointed by the Chief Executive.
The SFC is funded largely by the market. It may also apply to the Government for funding, although no funding has been sought from the latter in the past six years. The market contribution is in the form of fees and charges for specific services and functions performed by the SFC, plus a statutory levy on transactions recorded on the stock and futures exchanges. Its budget for 1999-2000 was $421 million and it had an establishment of 329 at year-end.
The SFC has developed a framework of securities and futures regulation that is on par with internationally accepted standards. In addition, it has published various codes of conduct and guidelines regulating market conduct and criteria for approval of investment products and licensing of market intermediaries.
Dealers in securities, investment advisers, commodity dealers and commodity- trading advisers, leveraged foreign exchange traders and their representatives have to register with the SFC. The criteria for registration are stipulated in the Securities Ordinance, the Commodities Trading Ordinance, the Leveraged Foreign Exchange Trading Ordinance, and the Securities and Futures Commission Ordinance. At the end of 1999, the SFC registered 22 538 persons, of whom 592 were corporate securities dealers and 160 were commodities dealers. Among them, 317 were from
overseas.
As regards the regulation of Leveraged Foreign Exchange trading, the SFC had issued 16 foreign exchange trade licences as well as 1045 licences for their representatives by the end of 1999.
Insider Dealing Tribunal
The Insider Dealing Tribunal is an important feature of the regulatory framework in Hong Kong. Established under the Securities (Insider Dealing) Ordinance, the tribunal looks into cases involving suspected insider dealing referred to it by the Financial Secretary. Since it commenced operation in 1994, the tribunal has successfully concluded eight cases.
Office of the Commissioner of Insurance
The Commissioner of Insurance, appointed as the Insurance Authority (IA), exercises prudential supervision over the insurance industry in Hong Kong under the Insurance Companies Ordinance (ICO).
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