FINANCIAL AND MONETARY AFFAIRS
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Deposit-taking companies are required to have a minimum paid-up capital of $25 million. They are restricted to taking deposits of not less than $100,000, with a term of maturity of at least three months. At the end of December, there were 101 deposit-taking companies, with total deposit liabilities to customers of $9.9 billion as at end December.
It is generally the HKMA's policy that a person who intends to hold 50 per cent or more of the share capital of an authorised institution incorporated in Hong Kong should be a well-established bank or other supervised financial institution in good standing in the financial community and with appropriate experience.
The Securities and Futures Sector
Only members of the SEHK and the Hong Kong Futures Exchange (HKFE) may trade on these two markets respectively. At year's end, the SEHK had 555 corporate and individual members while the HKFE had 135 members.
Securities transactions on the SEHK are executed by the Automatic Order and Execution System (AMS). In addition to the first and second terminals, a third AMS terminal was introduced in January 1998 so as to further increase the order input and order matching efficiency. The AMS was also upgraded to cater for the increase in trading capacity.
The HKFE launched three new products for trading in 1998 HKFE Taiwan Index futures and options contracts, one-month HIBOR futures contracts and Hang Seng 100 Index futures and options contracts. The trading of these contracts are conducted through HKFE's Automated Electronic Trading System.
The Hong Kong Securities Clearing Company (HKSCC) operates the Central Clearing and Settlement System (CCASS), which is one of the most important reforms to the risk management system introduced after the 1987 market crash. It is an automated book-entry system that handles the settlement of securities. To further enhance its services, the HKSCC extended the CCASS services to retail investors in May 1998. In addition, as a result of the linkage of the CCASS with the bank's settlement system also in May 1998, delivery against payment in respect of a securities transaction on a real-time basis was made possible.
To strengthen market discipline, the HKSCC has strengthened enforcement of the T+2 settlement rule and implemented compulsory buy-in for trades remained unsettled on T+3 since the third quarter of 1998.
Regulation of the Financial Sector
The government has consistently worked towards providing a favourable environment in the financial sector, with adequate regulation to ensure, as far as possible, sound business standards and confidence in the institutional framework, but without unnecessary impediments of a bureaucratic or fiscal nature.
The Hong Kong Monetary Authority (HKMA)
The HKMA was established in April 1993 by merging the Office of the Exchange Fund with the Office of the Commissioner of Banking. The Exchange Fund (Amendment) Ordinance 1992 provided for the establishment of the HKMA.