(b)
29.
Under the Securities and Futures Commission Ordinance, the SFC is responsible for supervising and monitoring the activities of the SEHK; to take all reasonable steps to safeguard the interest of persons dealing in securities; to promote and encourage proper conduct amongst members of the SEHK; to suppress illegal, dishonourable and improper practices in dealing in securities; and to promote and maintain the integrity of registered persons.
These legislative requirements, either taken alone or together with the SFC's Code of Conduct, form the basis upon which the SFC carries out its surveillance and enforcement activities.
Separately, the Stock Exchanges Unification Ordinance requires the SEHK to ensure an orderly and fair market in securities trading through the facilities of the SEHK and to act in the interests of the public, having particular regard to the interests of the investing public. Since its inception, the SEHK has been monitoring the activities of its members and their employees in accordance with the obligations and powers stipulated in its Memorandum and Articles of Association, which provide that the SEHK should, inter alia, promote and protect the interests of all members of the public having dealings on the SEHK or with its members; make, amend and repeal rules and by-laws affecting the conduct of its members; and establish committees for the interpretation and enforcement of any such rules, by-laws and the requirements under the Stock Exchanges Unification Ordinance. In pursuit of these objects, the SEHK has made the Rules and Regulations referred to in Part (a) of this reply.
As the front-line regulator of the securities market, the SEHK has a duty to monitor compliance by its members and their staff of the Rules and Regulations and to ensure that they would deal with clients honestly and fairly, give clients priority in all trading and disclose fully to clients information relevant to dealing in securities for or on behalf of clients.
It is therefore the considered view of the Administration that there is no question of the SFC and the SEHK acting beyond their authorities in monitoring the registered persons or their members' dealing activities. and in taking the necessary enforcement action to safeguard the interests of the investing public prior to the introduction of the relevant rules and codes of conduct.