Supplementary Question on Legislative Council Meeting – Proposed enhancements to decision-making and governance structure for listing regulation

MR CHAN CHUN-YING (in Cantonese):

President, as the Secretary for Financial Services and the Treasury pointed out in his main reply earlier on, “we need to constantly review the relevant regulatory regimes, streamline procedures
and enhance market efficiency and quality to reinforce Hong Kong’s status as the premier capital formation centre”. According to HKEx’s research report entitled “Disclosure-based regulation”, “[t]here is a world-wide trend to move from merit-based towards disclosure-based regulation of listed issuers”. This report even sets out the development of many securities markets in the Asia-Pacific region, including Japan, Singapore, Malaysia and Hong Kong, while also pointing out that many places are gradually moving from a merit-based to a disclosure-based approach to regulating their listed issuers.   In the 1930s, the United States already began to undertake reform in this direction.
With ongoing enhancement and improvement, the size of the United States’ capital market now ranks first in the world.
Can the Government tell us whether the regulatory regime for Hong Kong’s securities market has undergone any constant development in this direction over recent years?   Do the new reform proposals on listing regulation also dovetail with this direction?



President, all along, disclosure is not the sole basis of the listing regulatory regime in Hong Kong, meaning that our regime is not solely information-based or disclosure-based. Disclosure is premised on HKEx’s satisfaction that issuers and their business are suitable for listing, and the suitability issue is involved.   The purpose is to achieve gatekeeping for market quality.   Certainly, we will examine the disclosure-based approach as a general direction for Hong Kong and pay particular attention to this  direction.
Nevertheless, disclosure is basically not our sole basis. Rather, we emphasize the suitability of business and issuers.