Financial and Monetary Affairs | 87
Committee adopted a statement of Principles on Client Identification and Beneficial Ownership for the Securities Industry, which was endorsed by the Presidents' Committee in May 2004, representing the commitment of the global community of securities regulators to robust standards of client identification for the securities. sector.
The IOSCO Technical Committee, together with the Committee on Payment and Settlement Systems of the central banks of the Group of 10 countries (CPSS), released a report entitled Recommendations for Central Counterparties in November 2004. The report sets out comprehensive standards for risk management of central counterparties for both securities and derivatives markets. The SFC participated in the Task Force on Securities Settlement Systems, jointly established by the Technical Committee and the CPSS to formulate these standards.
In December 2004, IOSCO published its Code of Conduct Fundamentals for Credit Rating Agencies (CRAs), which aims to promote investor protection by safeguarding the integrity of the rating process. The SFC actively participated in the Chairmen's Task Force of the IOSCO's Technical Committee, which was responsible for developing the Code.
Insider Dealing Tribunal and the Market Misconduct Tribunal
The Insider Dealing Tribunal has been an important feature of the regulatory framework for the securities market in Hong Kong. Established under the Securities (Insider Dealing) Ordinance, the tribunal looks into cases involving suspected insider dealing referred to it by the Financial Secretary. Since the commencement of its operation in 1994, the tribunal has concluded 16 cases.
With the commencement of the SFO on April 1, 2003, the Insider Dealing Tribunal had been replaced by a Market Misconduct Tribunal (MMT), which covers five other types of market misconduct (namely false trading; price rigging; disclosure of information about prohibited transactions; disclosure of false or misleading information inducing transactions; and stock market manipulation) in addition to insider dealing. The MMT decides cases on the civil standard of proof and can impose a range of civil sanctions, such as ordering the disgorgement of profits, banning a person from trading in SFC regulated financial products and disqualifying a person. from directorship or management of a company.
The MMT inquires into market misconduct that occurred on or after April 1. 2003. The Insider Dealing Tribunal continues in existence to inquire into cases of insider dealing that occurred before April 1, 2003.
As an alternative to civil proceedings, market misconduct is subject to criminal prosecution, which, if successful, may result in more severe penalties on conviction, including up to 10 years' imprisonment or a fine of up to $10 million.
Recent Developments
The Government, together with the SFC, strives to continue to provide a favourable environment for introducing new financial products, and for their intermediaries.
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