Mr Chairman and legislators,

Hong Kong Exchanges and Clearing (HKEx) welcomes the publication of the report of the Panel of Inquiry on the Penny Stock Incident to give the public the details of the incident. HKEx acknowledges that there is room for improvement in a number of areas and accepts in principle the Panel's recommendations.

HKEx has submitted the inquiry report to its Board and the Listing Committees. GEM and Main Board Listing Committees will meet next week to discuss proposals on strengthening communications with the industry and the market when preparing consultation documents. Our executives will submit a report consolidating the views and comments of the two Listing Committees to the Board in mid-October for its consideration and discussion with the Securities and Futures Commission (SFC), after which the proposals will be finalised and implemented.

Meanwhile, HKEx has been reviewing the proposals in Part C of the Consultation paper issued on July 25. We have met a number of industry organisations and market participants including broker representatives, listed companies and investors during the preparation work.

As in the past, HKEx will work closely with the SFC in the preparation of the new consultation paper which is expected to be released at the end of October.

HKEx will also work closely with the Government and the SFC to further improve operations and communications under the three-tier regulatory structure.

Thank you.