Improving Securities Regulation and Financial Sector Governance in Macau SAR

The Macau Special Administrative Region (SAR) of China has made significant strides in developing its economy, with a strong focus on the financial sector. However, as the region continues to grow and evolve, it is essential that the legislation governing securities regulation and the financial sector is updated to ensure effective oversight and compliance with international standards.

Key Recommendations for Reform

The following are key recommendations for reform, categorized by area of focus:

Securities Regulation

Operational Independence of AMCM

• The legislation should be amended to specify more precisely the scope of operational independence of the Autoridade Monetária e Cambial de Macau (AMCM).
• The AMCM should add staff to perform supervisory functions over companies acting as financial intermediaries or providing other securities or investment services.
• Securities Regulatory Organizations (SROs) can be a valuable complement to regulatory oversight in achieving the objectives of securities regulation.

Bearer Shares and Operational Independence

• Current practice in some jurisdictions is either to forbid the use of bearer shares or introduce provisions for their immobilization. Macau SAR should consider one of those options.
• Legislation should be amended to permit the Macau Trade and Investment Promotion Institute (IPIM) to operate under general guidelines, achieving operational independence.

Financial Sector

Investments and Securities Regulation

• The legislation should be amended to grant comprehensive powers to the AMCM in the investments and securities sector.
• The investment funds legislation should be clarified as to what actions constitute offenses under the law and provide for sanctions for such violations.
• The legislation should be amended to grant the AMCM inspection, investigation, surveillance, and enforcement powers with respect to investment funds or financial intermediaries that are not banks.

Information Sharing and Collaboration

• The legislation should be amended to permit the AMCM to share information with other regulators in Macau SAR and in other jurisdictions.

Background

Macau SAR is a Special Administrative Region of China, with its own government and economy. The territory has a small population (435,235) and a GDP heavily dependent on tourism, light manufacturing, and the financial sector. The gambling industry accounted for about 30% of the GDP in 2000, while the manufacturing industry accounted for 9.7% of GDP in 2000.

By implementing these recommendations, Macau SAR can improve its securities regulation and financial sector governance, ensuring a stable and prosperous future for its citizens and businesses.