Financial and Monetary Affairs | 79
At year-end, there were eight automated trading services providers authorised by the SFC under section 95 of the Securities and Futures Ordinance (SFO) to provide automated trading services in Hong Kong. Automated trading services are services provided by means of electronic facilities, not being facilities provided by a recognised exchange company or a recognised clearing house, to transact or settle transactions in securities or futures contracts.
Securities and Futures Commission
The SFC was established in May 1989 following the enactment of the Securities and Futures Commission Ordinance (SFCO). The regulatory objectives of the SFC, as set out in the SFO that came into effect on April 1, 2003, are:
to maintain and promote the fairness, efficiency, competitiveness, transparency and orderliness of the securities and futures industry;
• to promote public understanding 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, the SFC is responsible for regulating the securities and futures markets in Hong Kong. At year-end, the SFC had a governing body of 11 directors (four of them executive and seven non-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 2005-06 (including depreciation) was $509 million.
The SFC seeks advice on policy matters from its advisory committee, which is made up of three executive directors of the SFC and 12 independent members. The independent members are appointed by the Chief Executive and are broad-based and representative of market users.
The exercise of powers by the SFC is subject to a range of checks and balances. For instance, a wide range of SFC decisions are subject to appeal and appeals are made to the independent Securities and Futures Appeals Tribunal chaired by a High Court judge. In November 2000, the Process Review Panel for the SFC (PRP) was established by the Chief Executive to review and advise the SFC on the adequacy of the its internal procedures and operational guidelines governing the actions and operational decisions it takes in the performance of its regulatory functions. Members