CHAMBER SUPPORTS REVIEW OF
REGULATORY FRAMEWORK OF STOCKS

The Hong Kong General Chamber of Commerce supports the need for a review of the operation of the current three-tier regulatory system for listed stocks, involving the Stock Exchange, the Securities and Futures Commission and the Government.

As a result, we welcome the statement today from the Financial Secretary, Mr Antony Leung, that he would invite experts to review the system as a result of the findings of the report on the "penny stocks" incident.

"There seems little doubt that some of the confusion arising from the recent consultation paper proposal to de-list so-called "penny stocks" from the main board of the Hong Kong stock exchange stemmed from the regulatory responsibility not being sufficiently clear," Chamber Chairman, Mr Christopher Cheng said.

"The relationship between the Government, the SFC and the Stock Exchange itself needs to be examined to see how the system can be made to work better. We accept the view put forward by the inquiry into the penny stocks incident and by the Financial Secretary himself that the current three-tier regulatory system is appropriate for Hong Kong, but that operationally it could perhaps be improved. Determining this should be the key objective of the proposed review," he said.

While supporting the review, Mr Cheng cautioned, however, that the shortcomings exposed by the "penny stocks" incident and the subsequent inquiry should not, by any means, be used as a criticism of the operations of the new ministerial system.

"The new system of accountability for principal Government officials has been in place for only three months." Mr Cheng said. "We have faith in the new system and believe that, in time, it will prove to be of great benefit to Hong Kong and its governance. It is not constructive to exaggerate this incident into a condemnation of the whole system, because this will only cause society to lose confidence in the government’s ability to govern."

For further information, contact: Eden Woon, CEO, 2823-1298