Hong Kong Government -
Deputy Secretary for
Having said that, the external environment is still weak, shadowed by uncertainty over the
The market performance in mid to late January arising from sell-offs in emerging market currencies is a timely and vivid reminder that financial markets remain volatility-prone, and highlight the need for a robust financial infrastructure, a topic that would be covered in the ensuing discussion today.
In particular, as the world's largest offshore renminbi business centre,
In addition, the CNH Hong Kong Interbank Offered Rate fixing, launched in June last year, provides a reliable benchmark for the market and serves as a reference for the pricing of loan products.
Smoother flow, better protection
We will continue to upgrade our financial infrastructure for a smoother flow of capital and better investor protection. A number of initiatives are in the pipeline. The
Among other initiatives, in collaboration with the
We also plan to amend the law to provide a comprehensive regulatory framework for stored value facilities and retail payment systems to offer better protection for users, and enhance the safety and soundness of such facilities and services.
We consulted the public on the proposed regulatory framework last year. The responses were generally positive. We plan to introduce an amendment bill into the
On the securities side, we are finalising an amendment bill to provide for a regulatory framework to enable the introduction of an uncertificated securities market regime in
This initiative will help enhance the overall efficiency of our securities market, improve investor protection and maintain our market competitiveness. We plan to introduce a bill into the
I would like to complete the picture by updating you on the fact that we have geared up our local financial infrastructure for the reform of the over-the-counter (OTC) derivative market. The Monetary Authority established the local trade repository last year and has implemented interim reporting requirements on banks.
OTC Clear, the local central counterparty, was also launched last year, providing clearing services for inter-dealer trades on interest rate swaps and non-deliverable currency forwards.
Stepping up risk management
Risk management goes hand in hand with infrastructure development in achieving financial stability. Advanced economies and international regulatory organisations have initiated various financial reforms since the 2008 financial crisis.
As an international financial centre,
Let me first start with the progress of the regulatory reform of the OTC derivative market in
The Bills Committee has basically finished its examination of the bill, and we look forward to the passage of the bill in one or two months. The regulators will soon conduct a public consultation on the detailed rules.
Another important reform under the G20 agenda would be the development of an effective resolution regime for financial institutions. It serves to enhance the resilience and stability of the global financial system.
According to the Key Attributes of Effective Resolution Regimes for Financial Institutions published by the Financial Stability Board in
In order to meet the standards, it will be necessary to make legislative amendments to bring our existing arrangements in line with the standards in the key attributes. We launched the first stage of public consultation last month, with a view to gathering views from the public and the financial services sectors on our initial thinking. The consultation will end in early April. We will carefully analyse the views gathered, and conduct the second stage of public consultation later this year.
On Basel III, we have implemented the first phase of capital requirements from
We are preparing for the implementation of the liquidity and capital buffer requirements promulgated by the Basel Committee. The relevant subsidiary legislation will be introduced into the
Promoting market development
While we are making a lot of effort in updating our regulatory toolbox, we have not lost sight of the need for market development to capture business opportunities in the
With fast economic growth and wealth creation in
As the world's largest offshore renminbi business centre,
Renminbi platform to be enriched
We shall enrich our renminbi platform with more diversified business activities and products, like cross-border renminbi insurance and the provision of renminbi services to overseas financial institutions at the wholesale level.
We have also established renminbi business links with overseas markets, including
Asset management has become more prominent in the international financial landscape, and more so for
In 2013, 995 companies were licensed or registered to conduct asset-management business in
In 2010, the Government extended the stamp duty concession to cover exchange traded funds, or ETFs, that track indices comprising not more than 40% of
Since then, the number of ETFs listed in
Duty waivers planned
The Financial Secretary now proposes to waive the stamp duty for the trading of all ETFs so that the trading cost of ETFs with a higher percentage of
We believe that this initiative will enable
We plan to introduce the necessary legislative amendments in the coming legislative session for early implementation of the exemption.
Also, noting that there is a growing popularity among the fund industry to use open-ended investment companies as a vehicle for setting up investment funds, together with the
This new market choice will help attract more funds to use
Accounting for around 20% of
To attract more private equity funds to domicile in
On the development of Islamic finance, we amended our tax laws last July to provide a comparable taxation framework for sukuk vis-a-vis conventional bonds, with a view to enhancing the competitiveness of
To continue to make steady progress on this front, we are seeking to accommodate the issuance of sukuk under the Government Bond Programme. We believe any inaugural issue of sukuk by the Government will encourage more investors to use
Speaking of market development, professionals and skilled personnel in various areas of the financial services industry are of vital importance to the sustained development and expansion of a financial centre. As proposed in the Financial Secretary's Budget, we shall consult the industry shortly and look at the related issues. We would welcome your views.
Modernised legal framework
Last but not the least, after years of preparation and consolidated efforts, the new Companies Ordinance will come into operation on
Shareholders' interest will be better protected and the transparency of company operation as well as the accountability of directors will be enhanced. At the same time, procedures will be simplified and compliance costs will be reduced under the new law.
For example, companies may dispense with annual general meetings with members' consent and more companies will be eligible for simplified financial reporting. The new ordinance will also abolish outdated concepts like the par value. Provisions are in place to ensure a smooth transition to the new regime.
Deputy Secretary for
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