We fully support the package of new listing structure and streamlined listing process announced by Secretary Ma. In particular we welcome the consensus reached among the Administration, the SFC and the HKEx that the Stock Exchange will continue to serve as the front-line regulator of listed companies. We believe the system has worked well. The Stock Exchange is close to the market, and is thus able to adjust its rules and procedures quickly to the latest market developments.

As announced by Secretary Ma, the new regulatory framework for listing will include combining the Main Board and GEM Listing Committees into a new Listing Committee to decide on new listing applications and the cancellation of listings for both the Main Board and GEM. It will consist of 24 to 30 independent members, with broad representation from issuers, financial intermediaries and the investing public nominated by a Nomination Committee and the Chief Executive of HKEx will be an ex-officio member. This will provide both proper checks and balances and market input to the listing and delisting process.

Decisions of the Listing Committee are subject to appeals to a Listing Policy and Appeals Committee on specified grounds. A Disciplinary Appeals Committee will also be formed to hear appeals against disciplinary decisions. Both appeal committees will consist of 10 to 13 independent members with broad representation from issuers, financial intermediaries, the investing public and two non-executive directors of HKEx.

The Nomination Committee (as at present) consists of representatives from HKEx and the SFC in equal number and will be responsible for nominating independent members to the new Listing Committee, the Listing Policy and Appeals Committee and the Disciplinary Appeals Committee.

HKEx will also take initiatives in the next few months to streamline the listing process and improve the quality of vetting. Under the streamlined process, the Listing Division will focus on the administration of the Listing Rules, while the listing applicants and their sponsors should assure the standard and the quality of prospectuses and related documents.

The proposed approach is built on the underlying principle that it is the responsibility of the listing applicants and their professional advisers to ensure full and proper disclosure of all material aspects of the listing applicant and its business and the associated risks. This clarification of the division of responsibilities between the Listing Division and the listing applicants and their sponsors will contribute to the healthy development of the securities market in Hong Kong.

HKEx will review the effectiveness of the new approach regarding the streamlined listing process and, if necessary, fine tune the process after 12 months of its full implementation.

HKEx believes that the modified proposal, backed up by the dual statutory filing requirement, will help to make Hong Kong's securities market stronger and even more competitive.

Subject to the approval of the necessary rule amendments and procedures as well as the appointment of the members of the new Listing Committee and the other two appeals committees, the new listing structures will be implemented on 1 January 2003.