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Hong Kong exchange seeks greater disciplinary powers

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HONG KONG, Aug 7 (Reuters) – The Hong Kong stock exchange proposed increasing its disciplinary powers in a consultation document published on Friday, the first significant change to those powers in 27 years.

The Stock Exchange of Hong Kong (SEHK), a unit of Hong Kong Exchanges and Clearing, is the front-line regulator for listings and listed companies in Hong Kong.

The proposals include giving the exchange authority to state publicly that individuals are unsuitable to be directors of listed companies, something it could not previously do.

It is also seeking greater powers to censure senior management of listed companies, in addition to directors, by saying that their presence is “prejudicial to the interest of investors”.

The SEHK’s disciplinary powers have not been significantly amended since they were put in place in 1993.

“We aim to have at our disposal a broad spectrum of disciplinary sanctions, so that we can protect the integrity of our markets and the investing public,” HKEX Head of Listing, Bonnie Y Chan, said in a statement.

The consultation, which closes on Oct. 9, does not propose giving the exchange the power to fine companies, currently the purview of the markets watchdog, the Securities and Futures Commission, which also regulates the SEHK.

Last month, the SFC told the exchange to improve its “Chinese wall” protocols among other changes to better manage potential conflicts of interest between its regulatory function and its role as an HKEX subsidiary generating revenue from listings and trading.

The Singapore Exchange’s regulatory unit this week also proposed adding to its powers.

(Reporting by Alun John, editing by Gareth Jones, Larry King)

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