To grow Hong Kong's standing as one of Asia's leading stock markets, regulators must strive to attract companies while maintaining a level playing field for investors.
In practice that means Hong Kong Exchanges and Clearing goes all out to welcome listings, while the market watchdog Securities and Futures Commission cracks down on errant investment banks and companies.
Their efforts are complementary but, especially in the case of mainland companies that operate under a different regulatory system, they can still be frustrated by misleading or incomplete information or a simple lack of access to it.
In an example of the latter the SFC fought with accounting firm EY for five years before a Hong Kong court gave it access to the auditor's working paper of its mainland clients in 2015.
The sticking point - Chinese laws that define audit papers as state secrets that cannot be taken out of the mainland. This breaks a paper trail fundamental to audit investigations.
In a breakthrough, Hong Kong's regulator of auditors for listed companies, the Financial Reporting Council, has reached a deal for access to these "secrets" that could make an immediate difference to nine current investigations.
Under a memorandum of understanding with a unit of China's Ministry of Finance, the council can ask the ministry for access to the auditors' papers on the mainland to help with investigations.
This is an overdue step that can only strengthen Hong Kong's status as a financial services centre. Accounting rules and standards between the two jurisdictions are very different. "State secrets" is a catch-all provision that compounds the difference.
Access to 'state secrets' to help in investigation of mainland firms
Council chairman Kelvin Wong Tin-yau concedes the secrets law is still there, but says the new deal has established a clear procedure for smoothing the path of audit investigations and disciplinary action.
It is a landmark in more coherent cross-border interaction after years of lobbying that reflects the aim of Chinese authorities to bring their accounting standards up to global standards.
It can only benefit the mainland if its companies are perceived to be stronger and better run as a result of compliance or compatibility with standards that prevail in the rest of the world.
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