ENG-2013 — Page 108

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Financial and Monetary Affairs

divided into five areas: intermediaries, market infrastructure and trading, listing and takeovers, investment products, and enforcement.

Intermediaries - The SFC's licensing regime sets standards with which industry practitioners seeking to be, and to remain, licensed must comply. It supervises licensed corporations, including stockbrokers, investment banks, futures and leveraged forex dealers, fund managers, investment advisers and credit rating agencies in Hong Kong, with a particular focus on their business conduct and financial soundness.

Market infrastructure and trading - The SFC supervises market operators, namely, the HKEx's exchanges and clearing houses, and automated trading services, including overseas exchanges operating in Hong Kong.

Listing and takeovers - The SFC oversees the listing-related functions of the SEHK, mergers, takeovers and share repurchases of public companies. It monitors announcements of listed companies and vets listing applications alongside the SEHK, in addition to granting approval for the creation of new listed products and enhancing listing rules.

Investment products - The SFC helps to develop Hong Kong both as an asset management centre and a premier offshore RMB centre. While facilitating market growth and product innovation, it continues to perform its gate-keeping functions in authorising investment products offered to the public and monitoring their compliance with disclosure and other requirements.

Enforcement - The SFC takes firm and prompt action in combating misconduct and malpractice in the securities and futures markets. It has statutory powers to discipline licensed intermediaries through reprimands, suspension of licences and imposing fines. It can also take market misconduct cases, such as insider dealing and market manipulation, directly to the Market Misconduct Tribunal for hearing. Through prosecution and disciplinary action against rule-breakers, it strives to protect the investing public and send strong deterrent messages to the markets.

The SFC's powers are subject to external checks and balances, designed to ensure fairness in its decision-making, observance of due process and proper use of its regulatory powers. Specified SFC decisions are subject to review by the Securities and Futures Appeals Tribunal. The SFC's procedures, actions and decisions are also subject to other checks and balances including the Process Review Panel for the SFC, the Ombudsman, and the courts.

Recent Developments

At the end of 2013, there were 38,985 licensed entities, including securities brokers, futures dealers, investment advisors and fund managers, as well as their representatives, and 121 registered institutions, such as banks, engaging in regulated activities such as dealing and advising on securities and futures.

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The tribunal is an independent body established under the Securities and Futures Ordinance, and is chaired by a judge or former judge of the High Court who sits with two members.

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