The Securities and Futures Commission (SFC) is reviewing comments from brokers, practitioners and other members of the public on its Draft for a Composite Securities and Futures Bill (Draft Bill) issued in April 1996. The Draft Bill aims to consolidate the present regulatory regime, embodied in not less than 11 Ordinances governing the securities industry, into a single user-friendly composite bill. After reviewing comments and suggestions from the public, the SFC is expected to redraft the Draft Bill and submit it to the Legislative Council for consideration in this legislative session.
The underlying purpose of the Draft Bill is to simplify, standardize and update the securities legislation. However, the Draft Bill also proposes some important changes:
- SEHK Monopoly and SFC Authority: The present statutory monopoly of the Stock Exchange of Hong Kong Limited (SEHK) will remain intact (Draft Bill, Clause 4.3). However, the Draft Bill proposes that the SFC would be given the power to "authorize a person to provide facilities for the trading of securities, futures contracts or other things" in the public interest (Clause 4.12). In addition, the transactions permitted on the SEHK would be dealings in such securities and "other things approved in writing by the SFC" (Clause 4.4). There has been some controversy with regard to the extent to which this will expand the SFC's power.
- Cross-border crime: Because market manipulation activities may take place across jurisdictional boundaries, the Draft Bill would make it clear that any activities which manipulated Hong Kong markets violated Hong Kong law even if they took place elsewhere (Clause 12.6(1)), and that activities in Hong Kong directed at manipulating a market elsewhere also violated Hong Kong law (Clause 12.6(2)).
- Licence suspensions: At present, a decision by the SFC to revoke or suspend a licence or registration cannot take effect for at least 30 days if an appeal is pending. During this time, investment funds may be at risk from mismanagement. The Draft Bill therefore proposes that the SFC would be empowered to revoke or suspend licences before any appeal, if this is in the interest of the investing public (Clause 3.2(3)(c)).
Anne W Y Chen and Steve S F Woo
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