Budget Speech

Improving the Financial Regulatory System

76.      Our financial system is sound with strong fundamentals. While the current financial crisis did not cause systemic problems to our financial system, we will still take steps to further improve Hong Kong's financial regulatory system so as to strengthen investor protection.

77.      The Government and regulators will continue to adopt a disclosure-cum-conduct based regulatory approach for the authorisation and sale of structured financial products. This regulatory regime rests on two important pillars, namely information disclosure and suitability assessment. On this basis, we have worked out an action plan for phased implementation. The measures in the first phase, which focus on improving the sales practices for investment products, the professional conduct of intermediaries and investor education, have been implemented. For the longer-term measures, we are consulting the public on proposals to establish an "Investor Education Council" and a "Financial Dispute Resolution Centre". Our aim is to strengthen investor protection in every aspect, from investor education, authorisation of investment products, disclosure requirements, sales practices, conduct of intermediaries to financial dispute resolution mechanism.

78.      We have been fostering a continuous disclosure culture among listed companies. We are preparing for public consultation on a proposal to amend the Securities and Futures Ordinance to require timely disclosure of certain price-sensitive information by listed companies. Our aim is to enhance the quality and transparency of the stock market.

79.      To consolidate our position as a financial centre, we will also continue with the following work this year: