Hong Kong Exchanges and Clearing Limited. The role of exchanges in securing effective enforcement of regulation

Transcription

1 Hong Kong Exchanges and Clearing Limited The role of exchanges in securing effective enforcement of regulation Karen Lee Head of Listing, Regulation and Risk Management Hong Kong Exchanges and Clearing Limited 6 June

2 Effective enforcement of regulation depends on:- Effective regulatory framework Clear regulatory philosophy and principles Effective enforcement Precautionary measures 2

3 Effective Regulatory Framework Well-established legal and regulatory framework in Hong Kong comprising:- Common law Statute laws Non-statutory rules Non-statutory codes of practices 3

4 SEHK s position in the overall regulatory framework Hong Kong Stock Exchange is the frontline regulator in respect of listing matters On top of the local statutory framework, listing rules provide further regulation on listed issuers aiming at promoting a transparent, fair & orderly market and enhancing listed issuer s corporate governance practices In this regard, listing rules are particularly effective in terms of Protections of shareholder s right Directors accountability and board practices Disclosure of financial information 4

5 Regulatory Philosophy We promote a disclosure based regulatory environment Enforcement of Listing Rules: - Increase transparency and ensure timely disclosure of sufficient information to enable investors to make informed investment decisions - Improve accountability of directors and the board of listed issuers 5

6 Principles of Good Regulation Effective use of resource Recognizing responsibility of directors, senior management and financial intermediaries Recognizing international nature of the market and HK s competitive position Minimizing compliance costs and adverse effect on competition and business activities Upholding fair and orderly market and promote prompt, even and accurate disclosure Striking a balance between investors protection 6 and business practicalities

7 Effective Enforcement Relationship between issuers and Hong Kong Stock Exchange is contractual in nature limited sanction available Efficient ongoing monitoring system Risk based - prioritize resources to deal with high risk areas and high risk issuers identified timely identification of breaches 7

8 Effective Enforcement (Cont d) Effective enforcement on breaches - System - judicial fairness and transparent ½ ½ ½ ½ Segregation of duties between investigation, adjudication Clearly defined procedures for all parties to follow Opportunity to be heard before decisions Appeal to external body 8

9 Effective Enforcement (Cont d) - Execution - fair and reasonable; no fear and no favour; risk based ½ sanction proportionate to breaches ½ prioritize resources to handle high impact cases on a timely basis ½ Co-operation with other enforcement agents or professional bodies in case of breach of statutes or professional standards 9

10 Precautionary Measures Irrespective of all the rules, regulations and procedures in place, most important :- Compliance - directors, senior management and financial intermediaries competence and integrity that matters - Fully understand their responsibility - Work with statutory regulators, professional bodes, educational institutional to provide training, raise professional standards. Supervision - investors education - knowing their rights - Media education 10

11 Enforcement Co-operation Refer cases to relevant authorities for possible breaches of other non-statutory codes and statutes in Hong Kong Seek regulatory co-operation from fellow regulators outside Hong Kong where necessary particularly where it involves cross-border activities 11

12 Challenging Task Ahead Increasing awareness of shareholders right and promptness to exert their rights Greater demand for corporate governance Increasing trend of globalisation 12