E
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Since the publication of the Report, there has been criticism that the proposed regulatory authority would become too powerful and that the high concentration of powers in the Chairman could result in a single person dominating the SFC. A summary of the main comments and suggestions is at Annex E. particular arguments have been advanced for the board to have a majority of outside directors and for the AC to be chaired by an independent chairman rather than by the Chairman of the SFC.
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A majority of non-executive directors on the board of the SFC could, presentationally, be seen to provide more checks and balances and would prove more acceptable to both the local financial community and the investing public. We are, therefore, sympathetic to this proposal but feel that no firm decision should be taken in advance of determining the precise powers and responsibilities of the board. Accordingly, we endorse the SRC recommendation that the SFC be governed by a small board to be appointed by the Governor, but propose that consideration be given at a later stage as to whether or not the board should have a non-executive majority.
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Whilst we see attractions in the appointment of an independent chairman
the AC, we feel that this might unnecessarily fetter the ability of the Chairman of the SFC to take the proper initiative in evolving policy. Furthermore we would see difficulties in finding a person of the appropriate standing to fill such a role. We thus propose that the AC be chaired by the Chairman of the SFC.
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On the appointment of members to
members to the AC, we endorse SRC's view in principle (paragraph 11 above). However, to be in line with existing Government arrangements for appointment to boards and committees, we propose that all appointments be made by the Governor.
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Although HKFE has put forward the view that the Exchanges should be represented on the AC, we share the view of the SRC that this would not be appropriate. This could give rise to unnecessary conflicts of interest and could affect the independence of the watchdog. We envisage that
that the SFC, in discharging its regulatory functions, would in any case have to be in frequent contact with the Exchanges at all levels.
Funding
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The SRC recommends that the SFC
the SFC "should be funded mainly from the market but partly also from Government". We support the SRC recommended approach and propose that the SFC should be allowed to impose a levy on transactions (to be collected by the Exchanges)
the Exchanges) while the Government should also contribute to its financing. Details will need to be worked
No comments yet.
Private notes are available after approval.