Hong Kong’s new competition law, which is set to take effect on Dec. 14, will put the city’s banks under greater scrutiny, an analyst says.
The Competition Ordinance will, among other things, enable authorities to terminate the directorship of top officials if banks are found to be engaging in anti-competitive practices or related misconduct.
As the financial community is subjected to closer scrutiny of its business practices, it may impact the sector’s performance on the stock market, according to Alex Gardner, an analyst with Bloomberg Intelligence.
Gardner, who has specialized in analysis of regulations in Asia’s financial sector, feels Hong Kong’s anti-trust law will have a lot of implications for the closely-knit banking industry, the Hong Kong Economic Journal reported.
He pointed out that in the United States litigation-related costs on large scale anti-trust lawsuits amounted to about US$7.1 billion in the second quarter alone, while fines related to interest rate manipulation totaled US$9 billion globally.
While the financial sector will come under some pressure, small and medium-sized enterprises and multinational corporations with relevant legal expertise will benefit from the new market structure after the anti-trust law comes into effect, Gardner says.
Bank should beef up their internal teams to hire international specialists to deal with potential disputes and cases, he added.
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