Hong Kong’s Financial Reporting Council (FRC) has signed an MoU with the Securities and Futures Commission (SFC) to strengthen the regulation of capital markets through collaboration between the two regulators.
Under the MoU, which took effect yesterday (24 February), the FRC and SFC agreed to develop a closer collaboration in the regulation of the securities and futures market, particularly in relation to the regulation under their respective supervisory regimes of listed entity auditors and compliance by listed entities with financial reporting requirements.
The collaboration between the regulators under the MoU, which includes case referrals, joint investigations, mutual assistance, capacity building and the exchange and use of information, aims to increase the overall effectiveness of both regulators in ensuring the quality of financial reporting by listed entities and the audit quality of listed entity auditors.
To ensure that their regulatory efforts are coordinated, the two regulators agreed to notify one another when preparing and issuing policies or guidelines which may have a significant impact on their respective regulatory functions.
FRC chairman Kelvin Wong said: “The signing of a new MoU between the SFC and the FRC underpins our collective resolve, as independent regulators, to collaborate effectively with each other and with other local, Mainland and overseas regulators, to protect the interests of the investing public and the wider public interest in Hong Kong’s capital markets and in the success of Hong Kong’s international financial centre.”
“Closer collaboration between the SFC and the FRC will be key to combat persistent problems with false or misleading financial statements and other corporate misconduct,” said Mr Tim Lui, Chairman of the SFC. “By working closely with the FRC to maintain the integrity of our capital market and promote good corporate governance, we can expect to see improvements in the audit quality of listed companies in the years to come.”
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