Financial Secretary Henry Tang has welcomed the Securities & Futures Commission's report on the annual review of Hong Kong Exchanges & Clearing's performance in its regulation of listing matters in 2004 and January 2005.

The first published annual review report focuses on the adequacy of HKEx's operational procedures in key functional areas.

Commission Executive Director of Corporate Finance Peter Au-Yang said: "Based on our review, the exchange's procedures in the areas examined are adequate to enable it to discharge its statutory obligation to maintain an orderly, informed and fair market.

"At the same time, we have made recommendations to further improve its procedures. The SFC will discharge its statutory responsibility to supervise, monitor and regulate the activities carried on by the exchange."

Main points

The key recommendations are:

* improving the transparency of policies and practices;

* establishing an electronic database to capture its institutional knowledge;

* setting up a comprehensive risk-based programme for reviewing listed companies' periodic reports;

* establishing a comprehensive case management system in the Compliance & Monitoring Department to improve efficiency and effectiveness;

* reviewing the search functions of and presentation of information on the public database of listed company information.

To read the full report click here.

"This is a major step forward to enhance the transparency of the SFC's oversight of HKEx's listing functions. I am thankful to the SFC and HKEx for their effort to enhance the quality of market regulation," Mr Tang said.

In future annual reviews, the commission intends to build on this foundation by focusing on other aspects of HKEx's listing functions, including quality of execution.