ENG-2004 — Page 128

98 Financial and Monetary Affairs

CEPA II, to be effective from January 1, 2005, will provide for further liberalisation measures. These include allowing consultancy companies established by Hong Kong accountants to provide bookkeeping services in the Mainland; deeming the auditing experience acquired by Hong Kong accountants in Hong Kong as the same acquired in the Mainland for the application of a practising licence in the Mainland; and allowing eligible Hong Kong residents to take the relevant Mainland accountancy qualification examinations.

Following the mutual recognition of qualifications of practitioners by the CSRC and the SFC under CEPA I commitments, 169 Hong Kong candidates passed the first examination on Mainland securities laws and regulations held in March. A number of them applied for and were granted the Mainland securities industry qualification. Another five Hong Kong professionals passed the examination on Mainland futures laws and regulations held in June. They qualified to apply for the Mainland futures industry qualification from early July 2004. Under CEPA II, the Mainland has agreed to allow SFC licensees who satisfy the requirements of the CSRC to set up joint venture futures brokerage companies in the Mainland. The SFC is working with the Mainland authorities on the details.

Enhancing Hong Kong's Competitiveness as an International Financial Centre

The Government is committed to strengthening Hong Kong's competitiveness as an international financial centre and the premier capital formation centre for the Mainland through enhancing its regulatory regime, promoting corporate governance, upgrading financial infrastructure and fostering the development of the bond market.

Enhancement of Hong Kong's regulatory framework will continue in the light of international experience and standards. The objective is an effective regulatory framework that will ensure sound business standards and confidence of the market but without unnecessary impediments. Some other major initiatives to enhance Hong Kong's competitiveness as an international financial centre are outlined in the following paragraphs.

Refinement/Improvement of the Securities and Futures Ordinance

The SFO came into force on April 1, 2003 and has been implemented successfully since then. The SFC continued to review the SFO after 21 months of implementation.

The Government has taken the lead in drawing up measures to improve the regulation of listing to enhance market quality, following public consultation on Proposals to Enhance the Regulation of Listing in October 2003. The consultation conclusions published in March 2004 recommended, among others, codifying in the statute the more important listing requirements, i.e. financial reporting and other periodic disclosure, disclosure of price sensitive information and shareholders' approval for notifiable transactions. Breaches of these statutory listing requirements would constitute a new type of market misconduct which could be subject to civil or criminal sanctions. The Government is working in collaboration with the SFC and