Budget Speech

Optimising the Supervisory Framework

47.      The Lehman Brothers Minibonds Incident has exposed certain problems of banks in conducting securities business. After considering reports prepared by the Hong Kong Monetary Authority and the Securities and Futures Commission, we have drawn up an Action Plan for conducting consultation on the recommendations and implementing the related measures in phases so as to further improve our regulatory framework and enhance investor protection.

48.      We are now working with the regulatory bodies to implement the initial phase of improvement measures. These include the introduction of new administrative guidelines or codes to strengthen the regulation of the business operation and conduct of financial intermediaries. Some of these improvement measures have already been implemented immediately. Further measures will be implemented after the regulatory bodies have completed their consultations. We are also considering action for the next phase and preparing for consultations on certain subjects relating to structural adjustment of our financial regulatory framework. We will also take into account the views of the Legislative Council Subcommittee to Study Issues Arising from Lehman Brothers-related Minibonds and Structured Financial Products, which will help us formulate the relevant legislative proposals. We will seriously and pragmatically review and implement the relevant measures in light of Hong Kong's unique background and needs, global financial development trends, recommendations of international financial institutions (including the G-20 and the Financial Stability Forum) and views from various sectors of the community.