FINANCIAL AND MONETARY AFFAIRS
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Apart from deposit-taking, conventional lending and foreign exchange dealing, banks and deposit-taking companies in Hong Kong are increasingly diversifying into other financial services, including the securities business, fund management and the provision of investment advice.
The government's sale of the Overseas Trust Bank to a subsidiary of the Guoco Group Limited in 1993 marked the end of the government's efforts to rescue banks in the 1980s. The Exchange Fund was involved in the rescue of seven banks in the 1980s, either by direct government acquisition or by provision of assistance in acquisitions by third parties. These rescues were carried out to maintain the stability of Hong Kong's banking sector and monetary system during a critical period. The latest estimate of the total net costs of the seven rescues amounted to $3.8 billion (about 3.6 per cent of the accumulated earnings and 1.3
per cent of the total assets of the Exchange Fund as at the end of 1992).
Dealers in securities, investment advisers, commodity dealers and commodity-trading advisers and their representatives are required to be registered with the Securities and Futures Commission. To obtain registration, they must comply with the requirements (including the 'fit and proper' test) stipulated in the Securities Ordinance, the Com- modities Trading Ordinance and the Securities and Futures Commission Ordinance. At the end of 1993, there were 10 840 registered persons. Of the 355 registered corporate securities dealers, 177 were from overseas. Of the 117 commodities dealers, 50 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 the year, the stock exchange had 579 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 1993, the Futures Exchange had 107 members.
Under the Insurance Companies Ordinance, insurance companies are authorised by the Insurance Authority to transact business in Hong Kong. At the end of 1993, there were 229 authorised companies. Of these, 125 were overseas companies from 27 countries.
Financial Markets
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 around the world. With an average daily turnover of around US$61 billion in April 1992, Hong Kong is among the largest markets in Asia, along with Tokyo and Singapore. Besides the Hong Kong dollar, most major currencies are actively traded in the territory, including the US dollar, Deutschemark, Yen, Sterling, Swiss franc, Australian dollar and Canadian dollar. As a market in foreign exchange, Hong Kong is favoured for many reasons, including an advantageous time zone location, a large volume of trade and other external transactions, the presence of a large number of international banks with experience in foreign exchange transactions, the absence of exchange controls and a highly advanced telecommunications system.
Equally well established and active is the interbank money market, which had an average daily turnover of $111 billion in December 1993. Wholesale Hong Kong dollar deposits and foreign currency deposits (mainly in US dollars) are traded both among authorised institutions in Hong Kong, and between local and overseas institutions. The interbank
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