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UPDATE 1-HK's SFC chief to step down summer 2011

Published 12/08/2010, 06:24 AM
Updated 12/08/2010, 06:28 AM

* Wheatley says it's been "hectic and demanding at times"

* SFC developed reputation for tough enforcement

* Replacement may come from outside SFC (Add comments, quotes)

HONG KONG, Dec 8 (Reuters) - - The head of Hong Kong's Securities and Futures Commission will leave the job next summer after five years, the regulatory body said on Wednesday.

Martin Wheatley, formerly the deputy chief of the London Stock Exchange, joined the SFC in 2005 and took over the chief executive's role in 2006. The SFC website shows that Wheatley's term was due to expire in September 2011.

"My six years with the SFC - hectic and demanding at times - have been very fruitful," Wheatley said.

"The Commission has taken in its stride the many challenges that confronted the financial markets and regulators and we have been able to adopt a pragmatic and sensible approach in our regulation," he added.

Under Wheatley, the SFC developed a reputation as a tough enforcer of regulations through a crackdown in the past two years on insider trading and other misdeeds in a market once famous for its anything-goes approach to capitalism.

"We downgraded Hong Kong in our recent survey on corporate governance in Asia because we believe both the government and regulators have done little in the past two years to raise corporate governance regulatory standards," said Jamie Allen, secretary general of the Asia Corporate Governance Association.

"The one consistently impressive area in recent years has been the SFC's enforcement action against insider trading."

The SFC's enforcement of tighter regulations included convictions of traders for market manipulation and other actions. That marked a big change for the region, where inside information was not even a criminal offence until 2003.

But the moves have triggered a backlash from businesses. Moreover, the government recently watered down a set of proposals that would have strengthened the regulator's hand.

"The general perception in the markets is Wheatley's done a very good job. He's had to tread a very difficult line between being tough on enforcement and actually listening to the industry," said James Wadham, a partner at Clifford Chance legal practice in Hong Kong.

Alan Ewins, who oversees law firm Allen & Overy's Asia Pacific Regulatory Group, said he hoped that balance would remain in the future.

"That equilibrium will be tested in the wake of his departure and it is to be hoped that his successor will ensure the stability that will be essential to the Hong Kong market going forward."

The territory's market participants expect the SFC to look for a replacement from outside the organisation.

"It's good we've got a lead period of six months - on previous changes they've given a few days' notice," said C.K. Low, a law professor at the Chinese University of Hong Kong.

(Reporting by Nishant Kumar, Daisy Ku, Rachel Armstrong and Vikram Subhedar; Editing by Neil Fullick)

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