ENG-2003 — Page 128

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FINANCIAL AND MONETARY AFFAIRS

treated on a par with Chinese CPAs in respect of the requirement for annual residency in the Mainland. The validity period of the 'Temporary Auditing Business Permit' applied by Hong Kong accounting firms to conduct temporary auditing services in the Mainland is also extended from six months to one year.

With respect to the securities industry, as provided under CEPA, the HKEx set up a representative office in Beijing in November 2003. Moreover, the CSRC and the SFC reached a consensus on the implementation of the CEPA provision on simplification of procedures for Hong Kong professionals applying for the Mainland securities and futures industry qualifications, and signed the 'Mainland/Hong Kong CEPA-Arrangements relating to Qualifications of Securities and Futures Industry Practitioners' in December 2003. The Arrangements also apply to Mainland professionals who want to obtain the Hong Kong qualifications.

Under the Arrangements, Hong Kong professionals having passed the examination on relevant Mainland laws and regulations may be granted industry qualifications by the Mainland's Securities Association of China or China Futures Association; while Mainland professionals may be deemed by the SFC as having satisfied the requirements for industry qualifications in Hong Kong. Subject to satisfying other requirements, these professionals may practice in the Mainland or be licensed in Hong Kong.

Initiatives to Enhance Hong Kong's Competitiveness

The Government is determined to strengthen Hong Kong's status as an international financial centre and the premier capital formation centre for the Mainland. To this end, a Financial Market Development Task Force was set up in December 2001 to provide a high-level forum to coordinate 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.

The individual 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.

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

Implementation of the Securities and Futures Ordinance

The SFO, which consolidates and modernises 10 ordinances governing the securities. and futures markets into a composite piece of legislation, strengthens the quality of the regulatory framework and keeps the regulatory regime on par with international standards and practices. It seeks to: facilitate development of a fair, orderly and transparent market to promote investors' confidence; secure appropriate investor protection; reduce market malpractice and financial crime; and facilitate market innovation and competition. The commencement of the SFO, on April 1, 2003, enhances Hong Kong's position as an international financial centre and the premier capital formation centre for the Mainland.

Main features of improvement under the new regulatory regime include:— (a) greater accountability of the SFC;