FINANCIAL AND MONETARY AFFAIRS
82
The HKEX rolled out the final phase of the CCASS/3 in May 2003 by introducing the Participant Gateway, which provides a direct electronic interface between the CCASS/3 and the CCASS Participants' back office systems. The CCASS/3_network connection provides integrated access to FinNet, which was built to connect financial institutions in Hong Kong to effect straight-through processing of financial transactions.
The HKEx upgraded the software of its electronic trading system for futures and options in October 2003. The upgrade raised the performance and stability capabilities of the Hong Kong Futures Automated Trading System (HKATS) and paved the way for the introduction in 2004 of an integrated clearing and settlement system for the HKEx's derivatives market to increase efficiency.
Securities and Futures Commission
The SFC was established in May 1989 following enactment of the Securities and Futures Commission Ordinance (SFCO). This represented the first important phase in the overhaul of the regulation of securities and futures markets in Hong Kong, and the implementation of one of the most important recommendations made by the Securities Review Committee in May 1988.
The regulatory objectives of the SFC, as set out in the SFO that came into effect on April 1, 2003, include:--
• to maintain and promote the fairness, efficiency, competitiveness, transparency and orderliness of the securities and futures industry;
• to promote the understanding by the public of the operation and functioning of the securities and futures industry;
⚫ to provide protection for members of the public investing in or holding financial
products;
to minimise crime and misconduct in the securities and futures industry;
⚫ to reduce systemic risks in the securities and futures industry; and
⚫ to assist the Financial Secretary in maintaining the financial stability of Hong Kong by taking appropriate steps in relation to the securities and futures industry.
Established as an autonomous statutory body outside the Civil Service, the SFC is responsible for regulating the securities and futures markets in Hong Kong. The SFC at present has a governing body of 13 directors (six of them executive) appointed by the Chief Executive. The Government is not involved in the day-to-day regulation of the securities and futures industry.
The SFC is funded by the market. No government funding has been sought since 1993. The revised estimate of its operating expenditure budget for 2003-04 was $408 million.
The SFC seeks advice on policy matters from its Advisory Committee, which comprises three executive directors of the SFC and 11 independent members. The independent members are appointed by the Chief Executive and are broadly based and representative of market users.
Exercise of powers by the SFC is subject to a range of checks and balances. For instance, decisions relating to matters concerning the licensing of persons and intervention in their business are subject to appeal to the independent full-time