Hong Kong markets watchdog to boost cooperation with foreign counterparts

June 5
9:05 AM 2015

Hong Kong's securities regulator said on Friday it will propose laws boosting cooperation with its foreign counterparts, at a time when the emergence of a number of cross-border fraud and corruption scandals make such collaboration vital.

The Securities and Futures Commission (SFC) said the new laws would make it easier to provide assistance to overseas peers by giving it powers to obtain records and documents from licensed companies at the request of those foreign regulators.

"The proposals will enable the SFC to adhere more closely to international regulatory standards and allow for more effective supervision of licensed corporations which operate in multiple jurisdictions," said Ashley Alder, the SFC's chief executive.

The issue of cross-border collaboration between regulators is in the spotlight following several global financial scandals this year.

Five of the world's largest banks were in May fined roughly $5.7 billion following U.S. charges over manipulation of foreign exchange rates, in schemes that took place in financial hubs worldwide.

Regulators in Asia, the United Kingdom and the United States investigated allegations that banks had colluded on manipulating the forex rates, after a similar probe into rigging of interbank interest rates.

Information sharing between regulators is also topical amid a long-running dispute between U.S. and Chinese authorities over accounting firms refusing to hand over documents in alleged fraud cases.

Working closely with foreign regulators is especially important for international finance centres such as Hong Kong, which can face problems including insider trading or market manipulation where the perpetrators may be offshore.

Foreign regulators will equally welcome new powers to obtain information on companies in Hong Kong, which regulators have alleged can sometimes be vehicles used by individuals to handle illicit payments.

U.S. agencies are now pondering how to enforce charges against defendants in the FIFA bribery scandal who are scattered across the globe.

Hong Kong has played a role in the scandal, with some payments mentioned in the Justice Department's indictment having been routed through bank accounts allegedly belonging to a so-called 'front company' in the Asian financial hub.

The SFC's proposed amendments will give it discretion to provide supervisory assistance to a regulator outside Hong Kong, but will not impose an obligation to do so.

The proposals will now be put to Hong Kong's government which will decide whether to make the suggested legislative changes.

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