on how we can ensure that the financial institutions and market players, which form the core part of any financial centre, can continue to stand up to the challenge of achieving and, more importantly, maintaining their competitive edge in a highly competitive world. i would like to argue that, in the remainder of my remarks, the success or otherwise of financial firms is to a large extent determined by their ability to exercise the power of the “ 3cs ”. let me elaborate what the “ 3cs ” stand for. “ competence ” the first “ c ” is “ competence ”. this is very easy to understand. it goes without saying that, for instance, a foreign exchange or bond dealer must possess the technical competence in the respective markets to perform effectively and professionally. by the same token, a private banker or financial advisor must also have the necessary technical knowledge before he or she can recommend or market wealth - management products to customers. however, financial innovation or engineering in the last two decades have greatly increased the complexity of financial products and market dynamics. some of the structured products and financial derivatives are so complex that it is a big challenge for traders to fully understand their features and risks, let alone for the less - sophisticated customers. to maintain technical and professional competence, financial firms and practitioners must ensure that they are kept up to date on the latest market developments and financial innovations. this is very similar to what other professions require. for example, in the field of medicine, doctors will need to keep updating themselves by reading medical journals and attending seminars to keep abreast of the latest medical advances. “ control ” the second “ c ” is “ control ”. it refers to the control and governance of banks, insurance companies, securities houses and other firms engaging in financial services. in general financial firms engage in two main types of business. the first type is the pricing and management of risks, which include credit, foreign exchange, market and maturity mismatch risks. clearly in the process of risk - taking, the prudential soundness of the balance sheets of the firms is crucial. they must be able to control the amount and types of risks based on prudent parameters. the history of the financial world is littered with staggering examples of breakdowns in risk control by firms, all of which inevitably led to disastrous outcomes not only for the firms themselves, but also for the societies as a whole in many instances. i don ’ t think i need to labour today why control and governance of risk - taking

, 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