ENG-2003 — Page 130

FINANCIAL AND MONETARY AFFAIRS

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The Government published in January 2003 a Corporate Governance Action Plan. The roll-out of the SFO is one of the major initiatives under the Action Plan.

In May 2003, the SFC and the HKEx jointly consulted the market on strengthening the regulation of sponsors and independent financial advisers. Responses to the consultation were being considered to develop measures to strengthen the present regulatory regime.

The HKEx issued the consultation conclusions on Proposed Amendments to the Listing Rules relating to Corporate Governance Issues in January 2003. Taking into account the responses to the consultation, the HKEx is in the process of amending its Listing Rules. It is also working on a Code on Corporate Governance Practices which will be released for public consultation in early 2004.

The Government published a Consultation Paper on Proposals to Enhance the Regulation of Listing in October 2003, following the issuance of a report by the Expert Group to Review the Operation of the Securities and Futures Market Regulatory Structure in March. Public views were sought on proposals to give statutory backing to certain fundamental listing requirements and on ways to improve the regulatory structure governing the performance of listing functions. The Government will consider carefully the public views received and work closely with the SFC and the HKEx to draw up appropriate measures to improve the regulatory regime for listing.

Enhancement of the Financial Infrastructure

As part of the three-pronged strategy announced in the Budget Speech in March 1999 for reforming the securities and futures markets in Hong Kong, the Financial Secretary appointed a Steering Committee on the Enhancement of the Financial Infrastructure in Hong Kong (SCEFI) to study and recommend the necessary improvements to the financial infrastructure in Hong Kong. The objective is to enhance the competitiveness of Hong Kong as an international financial centre in terms of risk mitigation, efficiency enhancement and cost reduction. The SCEFI recommended the development of a single clearing arrangement for securities, stock options, futures and other exchange-traded transactions; straight-through processing and a scripless securities market. The Government, together with the SFC, the HKMA and the HKEx, is pressing ahead with the implementation of various SCEFI recommendations.

In 2002, the SFC consulted the public on the proposed scripless securities market. The consultation conclusions were published in September 2003. The scripless initiative was broadly accepted by the industry. Following this, the HKEx published in October 2003 a separate consultation paper on proposed operational details of the scripless model. Comments received from the securities and futures industry are being analysed by the HKEx and conclusions will be published in 2004.

Human Resources Development

A robust physical infrastructure cannot function effectively without the input of trained persons of the right calibre. Hong Kong needs to have a workforce that is adaptable and well-equipped to meet future challenges and to reap the benefits offered by new opportunities. The Advisory Committee on Human Resources Development in the Financial Services Sector was established in June 2000, tasked with the mission to develop a vision on human resources development in the financial