FINANCIAL AND MONETARY AFFAIRS
74
group company. Professional reinsurers numbered 28, including most of the top reinsurers in the world. Latest statistics show that gross premium income in 1999 was about $58 billion, representing about 4.7 per cent of Hong Kong's GDP.
Financial Institutions
The Banking Sector
Hong Kong maintains a three-tier system of deposit-taking institutions, namely, licensed banks, restricted licence banks and deposit-taking companies. They are collectively known as authorised institutions under the Banking Ordinance. The Hong Kong Monetary Authority (HKMA) is the licensing authority for all three types of authorised institutions.
Only licensed banks may conduct full banking services, including operating current and savings accounts and accepting deposits of any size and maturity. Restricted licence banks engage mainly in merchant banking and capital market activities. They may take deposits of any maturity of $500,000 or above. Deposit-taking companies are owned mostly by, or otherwise associated with, licensed banks. Deposit-taking companies engage in a wide range of specialised activities, including consumer finance and securities business. They may take deposits of $100,000 or above with an original maturity of no less than three months.
Hong Kong has one of the highest concentrations of banking institutions in the world. At the end of 2000, 154 licensed banks, 48 restricted licence banks and 61 deposit-taking companies, which were beneficially owned by interests from over 30 countries around the world, were in business in Hong Kong. These 263 authorised institutions operated a comprehensive network of 1 547 local branches. In addition, there were 118 representative offices of overseas banks in Hong Kong. A local representative office is not allowed to engage in any banking business, and its role is confined to liaison work between the bank and its customers in Hong Kong.
The total deposit liabilities of all authorised institutions to customers and the total loans and advances extended by these institutions at the end of 2000 were $3,482 billion and $2,463 billion, respectively. The total assets of all authorised institutions. amounted to $6,689 billion at the end of the year.
The Securities and Futures Sector
The stock market and the futures market in Hong Kong are operated by the SEHK and the HKFE. Both the SEHK and the HKFE are wholly owned subsidiaries of the HKEx. At year-end, there were 515 corporate and individual exchange participants trading on the SEHK and 137 exchange participants trading on the HKFE.
Securities transactions on the SEHK are executed by the Automatic Order Matching and Execution System (AMS). To provide the market with a comprehensive trading environment and to further enhance its competitiveness, the SEHK launched the third generation of the system, AMS/3, in three phases from October. The new system provides a trading infrastructure which connects investors, brokers and the central market, enhancing market efficiency and enabling on-line trading in the stock market through e-commerce facilities. Meanwhile, the first ever electronic initial public offering (IPO) was launched in September in the Mass Transit Railway privatisation share offer. The issuer received around 75 000 electronic