of derivatives and fx business globally by broker - dealers. and in early 1996, 49 exchanges and clearing houses announced an agreement to exchange information on their members ’ risk exposures in different markets. another key development in international financial markets is the emergence of financial conglomerates which provides a wide range of services including insurance, securities, mortgage lending and banking services etc.. the fusion of different types of business is made possible by deregulation initiatives in major financial centres. in london, the rules of the stock exchange were amended in 1986 to allow acquisition of member firms by outsiders, including banks, thereby ending the separation of banking and securities businesses which had been a feature of the uk financial services industry for some 300 years. in the us, the glass - steagall act of 1933 still formally separates banking from securities businesses, but through liberal interpretation of this statute the us regulatory authorities have in recent years permitted the us banks to develop significant securities operations through special - purpose affiliates. furthermore, there is a widespread consensus within the us that glass - steagall should be repealed. in japan, the financial system reform law that came into effect in 1993 allowed commercial banks and securities firms to expand into each others ’ business territory by establishing separate subsidiaries. in the european union, the capital adequacy directive ’ s trading - book approach permits banks to engage freely in securities activities. the revolution in information and data processing technology has transformed our financial markets and the way our financial institutions conduct their operations. in most respects, these technological advances have enhanced the potential for reducing transaction costs, to the benefit of consumers of financial services, and for managing risks. but in many respects they highlight the inadequacies of existing regulations. the ease and cheapness of gathering, processing and disseminating information has encouraged financial innovation in a number of areas, including the development of screen - based trading systems, securitisation and the proliferation of derivative products. one of the regulatory responses to financial conglomerates is the adoption of consolidated supervision. regulators should consider whether various businesses within a conglomerate ( banking, securities, insurance, etc. ) should be consolidated in an accounting sense for the purpose of calculating capital adequacy and other prudential ratios, and for assessment in general. the more general view expressed, for instance, in european financial market directives and basle regulatory guidelines is that like activities should be treated identically for supervisory purposes, regardless of the category of institution. it is also important that bank and securities regulators

, control or culture are eroded. ladies and gentlemen, i have talked about the qualities or power of the 3cs and i hope you will agree with me that, if hong kong wishes to remain competitive as the region ’ s premier ifc, we will have to do everything we can to strengthen our “ soft power ”. more specifically, the financial services industry, the regulators and policy makers can and should work together to upgrade the 3cs, which is essential in maintaining our competitiveness against other financial centres. now i would like to name a few initiatives that the hkma is pursuing in this regard in collaboration with the stakeholders. ( a ) competence : in conjunction with the sfc, the industry and professional bodies such as the tma, the hong kong institute of bankers and the hong kong securities and investment institute, we are seeking to revamp and formalise the professional qualifications and training for market practitioners in the fields of private banking and wealth management in general. the hkma has also stipulated in its supervisory circular that banks must ensure that their staff have the necessary qualifications and professional training in the relevant fields. we are making good progress in this regard and we hope to be able to introduce an enhanced qualification and training framework in a few months ’ time. ( b ) control : under the banking ordinance, directors and senior management of banks must be “ fit and proper ”, given the important roles they play in ensuring that their banks are run prudently and properly. in order to enhance the control and governance functions of individual institutions, the hkma has recently refined the procedures for approving the appointment of bank directors and senior management. in addition to the usual vetting, we now convene face - to - face meetings with some of the nominated candidates. the purpose of these meetings is to enable the hkma to get to know the future directors and chief executives better and to make clear the hkma ’ s expectations of the roles and responsibilities their appointments will entail. it is important for all of us to appreciate that the ultimate responsibility for ensuring the safety and proper functioning of a financial institution rests with the institution itself. regulation and supervision can only supplement or reinforce the process and cannot replace sound control and governance within the institution. ( c ) culture : the latest global financial crisis and the subsequent developments have exposed clearly the fact that uncontrolled greed can and did generate highly undesirable outcomes. not only were financial firms badly hit by these outcomes, but in some instances the reputation