Hong Kong’s Securities and Futures Commission acknowledged the importance of investor confidence for the city to retain its hub status, underlining its commitment to the regulatory status quo.
SFC chief executive Ashley Alder’s provided extensive reassurances about its regulatory role, highlighting key moments in 2020 like the Next Digital share surge or the recent record-high fine from the 1MDB scandal.
«These statements, like everything we do, are rooted in our core values of independence, integrity and public accountability,» Alder said in the published opening remarks from the recent «SFC Compliance Forum 2020».
«We need to be clear-eyed about the challenges we face and we also need to maintain our independence and impartiality at all times.»
Geopolitical Challenges
On the national security law, Alder reiterated that the SFC was «not aware of any aspect of the new law which could change the rules and accepted practices governing trading in our markets or the way firms access and disseminate information under our regulatory regime».
And on recently enacted U.S. sanctions in the city, Alder said that the regulator had «communicated what we expect of firms and market participants when they consider the implications of potential sanctions» including sound management of business risk, legal risk and fair customer treatment.
«We will continue to regulate Hong Kong’s markets in an impartial and transparent manner just as we have always done,» he said. «You can depend on that.»
Data Storage
Alder stressed the need for cloud storage to secure «unrestricted access» to regulatory records, regardless of the external provider’s jurisdiction, adding «the prospect of a case not being pursued just because the SFC could not obtain regulatory records located outside Hong Kong would be unacceptable».
«Some have speculated whether these requirements had something to do with the geopolitical issues I mentioned earlier,» Alder noted. «This is entirely untrue, but illustrates the difficult environment in which we now operate.»
Covid Flexibility
In light of the pandemic, the SFC noted the greater flexibility it has applied to adapt including extended implementation deadlines, green lighting work-from-home arrangements and easier fund authorization.
«Here I want to be clear that by being more flexible, we were very conscious not to lower our standards or compromise market integrity,» Alder stressed.
«Everything we have done is consistent with the overall global approach which has been to adapt to the new environment without relaxing prudential and conduct standards.»
Opportunities Ahead
Adler closed his opening remarks with comments on opportunities ahead including: the opening of the mainland market; Greater Bay Area development; continued Stock Connect growth; secondary listings from U.S.-listed Chinese firms; and sustainable finance.
«To conclude, I want to stress once again that the fundamentals have not changed in any way, and that our stance as the regulator of Hong Kong’s capital markets remains the same,» Alder said.
«This is vital to maintain trust and confidence in our work despite a fraught political environment. We fully understand that investor confidence in the regulatory system is absolutely essential for Hong Kong to thrive as an international financial center.»
