The collapse of the US mortgage market four years ago has led to a financial crisis that continues to have a profound effect on the global economy and an unprecedented regulatory response. The crisis laid bare sheer size and interconnectedness of the global financial system, as well as the interdependence between the “real” economy and a highly complex financial infrastructure – ranging from banks to brokers and exchanges. Examples of the considerable regulatory effect now underway include proposals to insulate customers of systematically important financial institutions from the effects of financial stress (addressing the “too big to fail” problem) as well as a multitude of other global regulatory initiatives aimed at ensuring greater financial stability and the reduction of systemic risk.

These developments are of direct relevance to Hong Kong’s development as an international financial centre (IFC), which functions as a location for fund raising and investing for local and, increasingly, overseas participants. This “hub” role underscores the importance of collaboration between Hong Kong regulators with their counterparts, regionally and around the world. Without this, it would be extremely difficult to regulate effectively the activities of large global firms as well as all other overseas participants in our markets.

The global regulatory agenda is packed, and risks impacting Hong Kong continue to have their epicenter outside the city.

Consequently, in the year ahead, we view Hong Kong’s interaction with the international regulatory community – within Asia and globally – as a key area of focus, concentrating on financial stability, the reduction of systemic risks and implementing associated global and local initiatives.

Closer to home, we are addressing two equally important issues. The first is to foster the continued growth of Hong Kong’s position as an IFC and to further develop the city as an a renminbi centre. The second is to implement a series of initiatives to enhance investor protection.

All of these objectives can only be achieved through close collaboration within the SFC itself across our internal divisions; to that end, we have formed a number of cross-divisional teams to work on key initiatives.