Published On: Sun, Dec 12th, 2010

HK SFC Sums up Major Plans to Refine Financial Regulatory System

In its Quarterly Report for July to Sept 2010 released today, the Securities and Futures Commission (SFC) highlighted major plans to refine Hong Kong’s financial regulatory system.

Noting overall support from consultation respondents, the SFC announced its decision to establish a regulatory regime for credit rating agencies. The regime is expected to be implemented in mid 2011, upon completion of the relevant code and legislative amendments.

Jointly with Hong Kong Exchanges and Clearing Ltd, the SFC unveiled in September an agreed operation model to introduce a scripless securities market in Hong Kong. Separately, the SFC launched a consultation on proposals to extend the scope of the present requirements governing conflicts of interest to pre-deal research reports as well as analysts preparing research reports on real estate investment trusts, be they listed or applying for listing.

In August, the SFC authorized the first renminbi-denominated fund for retail investors in Hong Kong. In view of Hong Kong’s unique position to play a role in the internationalisation of the Mainland currency, the SFC urged industry participants to get prepared for handling listed renminbi-denominated products.

As the SFC Handbook, the new codes for investment products, went into effect in June, the SFC held meetings with the industry to offer guidance on how to apply the principles.

The report notes that the SFC made further progress in resolving Lehman Brothers (LB)-related issues. It reached an agreement with a bank to offer a refund on principal – with interest – to over 2,000 holders of LB-related Constellation Notes.

In September, InvestEd Intelligence was launched as a bimonthly newsletter to cover more topics of interest to investors. Regularly featured are articles on current market issues, popular investment products, common misconceptions and recent regulatory developments.

The Quarterly Report is available under “Speeches, Publications & Consultations” – “Publications” of the SFC website at

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