FINANCIAL AND MONETARY AFFAIRS
Futures Commission. To obtain registration, they must comply with the requirements (including the 'fit and proper test') stipulated in the Securities Ordinance, the Commodities Trading Ordinance and the Securities and Futures Commission Ordinance. At the end of 1989, there were 7 568 registered persons. Of the 230 registered corporate securities dealers, 132 were from overseas. Of the 102 commodities dealers, 37 were from overseas.
Only members of the Stock Exchange of Hong Kong Limited are permitted to trade on the Stock Exchange. At the end of 1989, the exchange had 711 corporate and individual members. Only shareholders who have applied for and been granted membership of the Hong Kong Futures Exchange Limited can trade on the Futures Exchange. At the end of 1989, the Futures Exchange had 87 members.
Under the Insurance Companies Ordinance, insurance companies are authorised by the Insurance Authority to transact business in Hong Kong. At the end of 1989, there were 273 authorised insurance companies. Of these, 147 were overseas companies from 27 countries.
Financial Markets
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Hong Kong has a mature and active foreign exchange market, which forms an integral part of the corresponding global market. The link with other major overseas centres enables foreign exchange dealing to continue 24 hours a day round the globe. With a total gross turnover of around US$49 billion per business day, Hong Kong is among the largest markets in Asia, along with Tokyo and Singapore. The major currencies traded on the local market against the US dollar as the reference currency include Deutschemark, Yen, the Hong Kong dollar, Sterling and Swiss franc. As a market in foreign exchange, Hong Kong is favoured by its time zone location, by its large volume of trade and other external transactions with the resulting demand for and supply of foreign currencies, by the presence of a large number of international banks with experience in foreign exchange transactions, by the absence of exchange controls and by a highly-advanced telecom- munications system.
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Equally well-established and active is the interbank money market, in which wholesale Hong Kong dollar deposits and foreign currency deposits (mainly in US dollars) are traded both between deposit-taking institutions in Hong Kong, and between local and overseas institutions. This market is mainly for short-term money from maturities ranging from overnight to six months for Hong Kong dollars and to 12 months for US dollars. The traditional lenders of Hong Kong dollars in the market tend to be the locally-incorporated banks, while the major borrowers are those foreign banks without a strong Hong Kong dollar deposit base in Hong Kong. As an indication of the size of the market, at the end of 1989, interbank liabilities accounted for 39 per cent of the total Hong Kong dollar liabilities of the banking sector; the corresponding share for foreign currency interbank liabilities was 77 per cent.
The capital market is an important source of finance for corporate borrowers. The two main types of negotiable debt instrument traded in the market are certificates of deposit issued by authorised institutions and commercial paper issued by other private sector companies. This market experienced a rapid expansion in the mid-1980s, gaining momentum from the global trend of securitisation of debt, the importation of innovative financial products (particularly interest rate swaps), and declines in interest rates during most of that period. Although the market has been less active recently, the more relaxed attitude taken by the government towards the issue of Hong Kong dollar-denominated debt instruments by non-residents and the abolition of interest tax with effect from the
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