Hong Kong Advances Financial Services Plan
Thursday, March 25, 2010

In a speech to the Finance Committee (Financial Services), Hong Kong’s Secretary for Financial Services and the Treasury, Prof. K C Chan, reviewed the government’s policy objectives in financial services, particularly in promoting market development and optimizing the regulatory system.

On promoting market development, he highlighted the measures to develop offshore renminbi (RMB) business in Hong Kong, which, he said, is the best option for promoting the use and circulation of RMB outside of mainland China in an orderly manner.

“Together with the Mainland authorities, we will continue to pursue further refinements to the RMB trade settlement services and promote the expanded use of RMB outside the Mainland,” he added. “We will also further develop the RMB clearing platform in Hong Kong, facilitating Hong Kong's development as a regional RMB settlement centre.”

He hoped to further promote the development of RMB bond business in Hong Kong. “This includes expanding the issuance size of bonds and increasing the types of bond issuers and the classes of qualified investors,” he said. “Last year, the amount of RMB bonds issued in Hong Kong reached RMB16bn (USD2.35bn), including RMB6bn of sovereign bonds launched in Hong Kong for the first time.”

The government hopes that RMB sovereign bonds will be issued on a regular basis in Hong Kong and that RMB-denominated investment products will be developed, thereby promoting the further development of RMB business in Hong Kong.

It will also promote Hong Kong’s asset management business, following the introduction in the budget of three tax measures, which included extending the stamp duty concession in respect of the trading of exchange traded funds and optimizing the tax arrangements for qualifying debt instruments and offshore funds.

With regard to refining Hong Kong’s regulatory regime to protect the interests of stakeholders, the government and regulatory bodies have joined in implementing a series of initiatives to enhance investor protection.

A continuous disclosure culture among listed companies is also being encouraged. “One way to achieve this goal is to codify in statute requirements on timely disclosure of price sensitive information by listed companies,” he stated. “We are preparing the legislative proposals for public consultation.”

He disclosed that the government has completed the review on the existing deposit protection scheme (DPS). “The bill for amending the DPS Ordinance will be introduced into the Legislative Council in the second quarter with a view to implementing the enhancement measures to strengthen the protection for depositors upon expiry of the 100% deposit guarantee at the end of this year.”

He further disclosed that the Trustee Ordinance and related matters are being reviewed. “We released the consultation conclusions in February this year, and briefed the Panel on Financial Affairs on the conclusions in early March,” he said. “We will seek to introduce the amendment bill into the Legislative Council in the 2010-11 legislative year.”

Finally, to align with the relevant international standards, the government is preparing a bill to codify the customer due diligence and record-keeping requirements for financial institutions, and is to set up an anti-money laundering regulatory regime for remittance agents and money changers.

In the past year, he pointed out, the government has “conducted two rounds of public consultation on the relevant legislative proposals and held consultation sessions for various sectors. We are now studying in detail the views collected and plan to introduce the bill into the Legislative Council in the second quarter of this year.”