ENG-2001 — Page 127

FINANCIAL AND MONETARY AFFAIRS

In a bid to further strengthen communication and enhance co-operation, the SFC had regular meetings with the China Securities Regulatory Commission (CSRC), the two exchanges in Shanghai and Shenzhen, and the HKEx to discuss issues of mutual interest.

Initiatives to Enhance Hong Kong's Competitiveness

The Government is determined to maintain and strengthen Hong Kong's status as a leading international financial centre. For this purpose, a Financial Market Development Task Force was set up in December to provide a high-level forum to co- ordinate new initiatives in promoting the development of Hong Kong's financial markets. The Task Force brings in expertise and professional input from the regulators and market participants, and will report progress to the Financial Secretary from time to time.

Moreover, the concerned regulators will continue to further enhance Hong Kong's regulatory framework in the light of international experience and standards. The objective is to have an effective regulatory framework that will ensure sound business standards and confidence of the market but without unnecessary impediments of a bureaucratic or fiscal nature.

Other initiatives to enhance Hong Kong's competitiveness as an international financial centre are outlined in the following paragraphs.

Securities and Futures Bill

To modernise the regulatory regime for the securities and futures market, the Securities and Futures Bill was introduced into the Legislative Council in November 2000. The bill consolidated 10 existing ordinances governing the securities and futures market. Opportunity was also taken to add new elements of regulation into the bill, which included the introduction of a single licence for market intermediaries, the establishment of a more effective regime to combat market misconduct and an upgraded disclosure regime to enhance market transparency. The proposed regulatory framework would be on a par with international standards. It seeks to facilitate development of a fair, orderly and transparent market to promote market confidence; secure appropriate investor protection; reduce market malpractice and financial crimes; and facilitate innovation and competition. By the end of the year, the Legislative Council had almost completed its scrutiny of the bill. Targeted for operation in 2002, the new regulatory framework would enhance Hong Kong's position as an international financial centre and the premier capital formation centre for the Mainland.

Company Law and Corporate Governance Reform

Good corporate governance is essential to fostering a fair, open and efficient regime. The Standing Committee on Company Law Reform (SCCLR), established in 1984, meets regularly to consider amendments to the Companies Ordinance as and when experience shows them to be required.

The Companies (Amendment) Bill 2001 and the Companies (Summary Financial Reports of Listed Companies) Regulation, which were passed by the Legislative Council in October and December, respectively, will enable listed companies incorporated in Hong Kong to distribute summary financial reports to their members.

83