ENG-2000 — Page 116

80

FINANCIAL AND MONETARY AFFAIRS

SEHK, the HKFE and their Clearing Houses to ensure the sound functioning and development of their trading, settlement and operational systems. It also administers the two statutory investor compensation funds, namely the Unified Exchange Compensation Fund and the Commodity Exchange Compensation Fund, which were established respectively under the Securities Ordinance and the Commodities Trading Ordinance.

The Corporate Finance Division is responsible for regulating takeovers and mergers and share buy-backs of public companies, administering securities legislation relating to listed companies and the Codes on Takeovers and Mergers and Share Repurchases, and supervising the listing-related activities of the SEHK.

The Intermediaries and Investment Products Division administers the registration requirements for securities and commodities dealers, securities margin financiers, investment advisers and their representatives, as well as leveraged foreign exchange traders, including matters relating to the fitness and properness of registered persons. In addition, the division also supervises registered dealers and investment advisers to ensure that they are financially sound, adhere to good business practices and are in compliance with registration requirements. It is also responsible for regulating the marketing to the public of unit trusts, mutual funds and other collective investment schemes.

The criteria for registration are stipulated in the Securities Ordinance, the Commodities Trading Ordinance, the Leveraged Foreign Exchange Trading Ordinance, and the Securities and Futures Commission Ordinance. At the end of 2000, the SFC had registered 22 668 persons, of whom 361 were corporate securities dealers and 160 were corporate commodities dealers. As regards the regulation of leveraged foreign exchange trading, the SFC had issued 12 foreign exchange trade licences by the end of the year.

To ensure that the registered persons and applicants possess the necessary technical skills and knowledge to perform regulated activities, the SFC introduced new competence and continuous professional training requirements. Following this change, the SFC issued in December the revised Fit and Proper Criteria and the Guidance Note on Competence and the Guidance Note on Continuous Professional Training. The new requirements, that would affirm the professional standard of financial intermediaries in Hong Kong and further enhance Hong Kong's competitiveness position as an international financial centre, would come into effect from April 1, 2001.

Following the merger and demutualisation of the SEHK, the HKFE and their associated clearing houses and the establishment of the HKEx on March 6, 2000, the SFC assumed responsibility for front-line supervision of exchange participants and took over the disciplinary matters involving these intermediaries.

The Enforcement Division is responsible for undertaking inquiries into alleged breaches of relevant ordinances and codes, including possible insider dealing and market manipulation offences.

There are other supporting divisions and departments, including the Legal Services Division, to assist the commission in discharging its duties.

The SFC considers investor education the first important step to investor protection. In June, the SFC launched the web-based electronic investor resources centre (eIRC), which gives investors access to a round-the-clock, one-stop and