ENG-2003 — Page 119

FINANCIAL AND MONETARY AFFAIRS

Securities and Futures Appeals Tribunal (SFAT), which has replaced the previous part-time Securities and Futures Appeals Panel. A much wider range of the SFC's decisions are now subject to appeal to the tribunal. In November 2000, a Process Review Panel (PRP) was established to undertake an ongoing review of the fairness. and consistency of the SFC's internal operational procedures. Members of the PRP are appointed by the Chief Executive. The Government published the PRP's second Annual Report in May 2003. The PRP could not identify any serious deficiency in the SFC's operational process. Yet, there were certain areas where the PRP has made recommendations for improvement. The SFC has been positive in adopting the recommendations of the PRP.

Broadly speaking, the SFC's work involves licensing, supervision and monitoring of intermediaries; regulation of the public marketing of unit trusts, mutual funds and other collective investment products; regulation of takeovers, mergers and other corporate activities; listing regulation under the dual filing system for IPO applicants and issuers; supervision of markets including the exchanges and clearing houses; enforcement of securities laws and rules; and investor education.

As at year-end, there were 20 103 licensed persons, including securities brokerage firms, futures dealers, and securities margin financiers, as well as their representatives, and 98 registered institutions, such as banks, engaging in regulated activities like dealing and advising on securities and futures.

The SFC considers investor education the first important step to investor protection. It maintains an Electronic Investor Resources Centre (eIRC), which is a web-based collection of investor education materials and links. It aims to assist investors in making informed investment decisions.

During the year, the SFC continued its active campaign to educate investors on various investment related subjects. Easy-to-understand leaflets and feature articles were published online and in hard copies on investing basics, bonds, portfolio planning, pooling risk in margin trading, hedge funds, exotic warrants, commodity futures and index tracking exchange traded funds.

As in previous years, the SFC also organised a series of investor education workshops for secondary school teachers of Economics, Commerce and related subjects to facilitate their teaching work. It also partnered with the Open University and the HKEx to organise investor education lectures for the public free of charge. In the meantime, the SFC remained active in external relations and international activities. In June 2003, it signed a Declaration on Co-operation and Supervision of Cross-Border Investment Management Activity with the Australian Securities and Investments Commission (ASIC). The MoU enables the SFC and the ASIC to exchange information and offer assistance to each other concerning the activities of fund managers licensed in their respective jurisdictions.

The SFC continued to participate in different aspects of the work of the International Organisation of Securities Commissions (IOSCO), including the work on the regulation of securities analysts and rating agencies. Hong Kong was selected by the IOSCO Executive Committee to host the 31st Annual Conference of IOSCO in 2006. This will be the first time that Hong Kong has hosted the IOSCO Annual Conference.

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