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Capital Markets Law Journal Advance Access originally published online on June 6, 2009
Capital Markets Law Journal 2009 4(3):383-404; doi:10.1093/cmlj/kmp011
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© The Author (2009). Published by Oxford University Press. All rights reserved. For Permissions, please email: journals.permissions@oxfordjournals.org

Regulatory competition and cooperation between securities markets in Hong Kong and Mainland China

JiangYu Wang*
* JiangYu Wang is an associate Professor, Faculty of Law, the Chinese University of Hong Kong (on leave from Faculty of Law of National University of Singapore). I thank my colleague David Donald for his extremely helpful comments. I also thank Low Chee Keong, Michael Lower, Zhang Yihong, Meng Fanpeng, Zheng Yu, Chen Kaiyu, Huang Danhan and a few others for their valuable comments and assistance. All errors remain my own.

The first 150 words of the full text of this article appear below.


Key points

  • This article examines regulatory cooperation and competition on securities markets development between Hong Kong and Mainland China, focusing on the regulation of listing of PRC firms in Hong Kong, the impact of PRC capital account control on Chinese portfolio investment in Hong Kong, and cross-border cooperation—or the lack thereof—on securities law enforcement.
  • The relationship of regulatory cooperation and competition between securities markets in Hong Kong and Mainland China must be understood in its political context, in particular the special relationship between the two sides under the ‘One Country, Two Systems’ formula.
  • Regarding cross-listing of PRC firms in Hong Kong, Hong Kong's better regulatory regime seems to serve as a bonding mechanism for improving corporate governance of the PRC firms. However, a revised interpretation of the bonding effects might be needed given that the road to listing in Hong Kong for a significant number of the PRC firms was . . . [Full Text of this Article]

 

   1. Introduction
 

   2. The China factor in Hong Kong's securities markets
 

   3. The framework of regulatory cooperation and competition between Hong Kong and Mainland China
 
Special relationship under the ‘One Country, Two Systems’ formula
The official regulatory cooperation framework

   4. Cooperation and competition on listing of Mainland companies
 
Reasons for the listing of PRC companies in Hong Kong: financial, political and bonding
Bonding Chinese SOEs to Hong Kong's better regulatory regime
Testing the bonding effects
Political limits on the bonding effects

   5. Market integration and regulation of portfolio investment from Mainland China
 

   6. Cross-border enforcement
 

   7. Concluding remarks
 

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