ENG-2005 — Page 111

Financial and Monetary Affairs | 81

Financial Services Commission of Guernsey, Malaysia's Securities Commission and Jersey's Financial Services Commission. The LOIs aimed to enhance cooperation with a view to working towards the mutual recognition of investment products authorised in the signatories' jurisdictions for cross-border distribution.

In addition, the SFC signed a Statement of Intent with the Financial Services Agency of Japan on cooperation, consultation and the exchange of information. It also exchanged Side Letters with the Monetary Authority of Macao under an existing MOU on mutual assistance and exchange of information.

The SFC continued to actively participate in the work of the International Organisation of Securities Commissions (IOSCO). In April 2005, it participated in the 30th Annual Conference of the IOSCO in Colombo, Sri Lanka. The Colombo Annual Conference was a landmark meeting during which the IOSCO adopted a timetable to be complied by all member regulators. By the benchmark date on 1 January 2010, all member regulators should have been accepted as signatories under the IOSCO MOU, or have expressed a commitment to seek legal authority in enabling them to become signatories.

Insider Dealing Tribunal and the Market Misconduct Tribunal

The Insider Dealing Tribunal was an important feature of the regulatory framework for the securities market in Hong Kong. Established under the repealed Securities (Insider Dealing) Ordinance, the tribunal looked into cases involving suspected insider dealing referred to it by the Financial Secretary. By year-end, it had concluded a total of 20 cases since it was launched in 1994.

When the SFO came into force on April 1, 2003, the Insider Dealing Tribunal was replaced by the Market Misconduct Tribunal (MMT), which covers five other types of market misconduct (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

Following market consultation, the Code on Unit Trusts and Mutual Funds was amended in April 2005 to allow SFC-authorised schemes to invest in REITs listed on a stock exchange anywhere in the world. This helps broaden the investment choice of SFC-authorised schemes.