XN000022-1996-04-03 — Page 73

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(b)

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The Securities and Futures Commission has outlined under the Work Programme section of the Corporate Plan 17 items of new initiatives that will be pursued in the next three years as part and parcel of a strategy to maintain the competitive edge of the Hong Kong market, thereby enabling Hong Kong to retain the status as a leading regional market. The successful development and implementation of these initiatives will require full co-operation, co-ordination and communication between the SFC and the SEHK as well as the commitment and dedication of the people involved. As a general guideline, the SFC will be primarily responsible for the initiatives where the thrust is market regulation and the SEHK will be primarily responsible for the initiatives where the thrust is development of the stock market. For example, the SFC would take the lead in the study on the local over-the-counter derivatives market with a view to developing an appropriate regulatory regime, in further enhancing its market surveillance capabilities to deal with malpractices in the market, and in developing guidelines on internal control by market intermediaries. On the other hand, the SEHK would take the lead in the study on the feasibility of a second board, a depository receipts market or other trading facilities for regional stocks, in surveys of retail participation, and in organising industry training programmes related to the stock market. In practice, both organisations will be working jointly and closely on many of the initiatives, as market development and regulation often go hand in hand. Joint efforts are also required where cross-market issues are involved, e.g., in initiatives related to China in general, and to the study of the China capital and debt markets in particular, and in the development of an international promotion programme involving the key market participants.

(c) The Secretary for Financial Services is supported by one Deputy and two other officers in the Financial Services Branch in dealing with policy issues concerning the securities and futures market. The day-to- day supervision of the market is the responsibility of the SFC, the SEHK and Hong Kong Futures Exchange. There is on-going liaison and co- ordination between the Branch, the SFC and the two Exchanges. Such efforts will continue and intensify as necessary in response to the changing market environment.