Financial Secretary Antony Leung believes the expert group's suggestions will enhance the quality of Hong Kong market.

The shared regulatory roles of the Hong Kong Exchanges and Clearing, and the Securities & Futures Commission lead to confusion and need to be clarified.

This is the finding of a review of Hong Kong's regulatory structure for the listing of securities.

The expert group reviewing the operation of the securities and futures market regulatory structure delivered the report to the Financial Secretary today.

Financial Secretary Antony Leung said, "We hope to put the expert group's suggestions into implementation within 18 months."

It suggests the listing function be removed from the HKEx and be performed by a new division of the commission to be known as the Hong Kong Listing Authority.

The authority should be accountable for both regulation and market development.

The commission should be the statutory regulator of listed companies and sufficient resources should be provided to enable it to perform its functions properly.

HKEx, relieved of its regulatory burden, should be allowed to operate as a commercial entity with minimal Government influence and less Commission involvement.

The authority should be led by an executive director of the commission and be staffed by highly skilled and experienced market professionals. As far as possible, staff of HKEx's Listing Division should be offered employment in the authority.

The chairman of the expert group Alan Cameron said: "The group is strongly of the view that the interests of Hong Kong will be best served by the Government taking an early decision to implement these proposals. There has already been widespread consultation and we are confident that our recommendations will receive broad support.

"Our firm conviction is that the listing function must be removed from HKEx. HKEx should then be allowed to concentrate its energies on its commercial activities, unrestrained by the burden of regulation and perceptions of conflict."

Regardless of how well the conflict can be managed, the existence of such a conflict is, in itself, not conducive to the development of Hong Kong as an international financial centre.

"Our work has confirmed that Hong Kong's legal, business and technological infrastructure is widely respected by market participants both in Hong Kong and in the international community. During the past decade, the Stock Exchange of Hong Kong has established itself as the venue of choice for leading Mainland enterprises wishing to tap international capital markets."