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Financial and Monetary Affairs
proposals. The Government plans to launch a public consultation on the legislative proposals in April 2013.
Trust Law Reform
The trust law reform seeks to enhance trustees' default powers, whilst providing appropriate checks and balances to ensure trustees exercise the new default powers properly. This will bolster the competitiveness of Hong Kong's trust services industry and attract settlors to set up trusts in Hong Kong, in turn enhancing Hong Kong's status as an international asset management centre. The response to the public consultation on the detailed legislative proposals in March 2012 was generally supportive and the consultation conclusions were published in November 2012. The relevant Amendment Bill will be introduced into the Legislative Council in early 2013.
Developing a Scripless Securities Market
A bill is being prepared to provide the legal framework for a scripless securities market in Hong Kong, allowing investors to hold securities electronically in their own names, with legal title rather than just the beneficial interest of the securities. The proposal will provide better investor choice and protection and help enhance the overall competitiveness of our securities market.
Development of the Bond Market
Under the Government Bond Programme (GBP) introduced in 2009, the Government is authorised to issue bonds with an aggregate outstanding principal of up to $100 billion and to have a Bond Fund to manage the sums raised under the GBP".
In 2012, six tenders of Government bonds for institutional investors were made under the GBP, attracting a diverse group of investors. In June 2012, the Government issued $10 billion. inflation-linked retail bond (iBond), with a tenor of three years, for the second time under the GBP to Hong Kong residents to promote further development of a retail bond market in Hong Kong. Over 330,000 valid applications for nearly $50 billion in principal amount of the bond were received, both setting records in the local retail bond market. At the end of 2012, outstanding Hong Kong dollar debts, including Exchange Fund Bills and Notes, totalled $1,309 billion.
Developing Islamic Finance
The Government continued to create an environment conducive to the development of Islamic finance in Hong Kong in collaboration with the financial regulators and the private sector. In March 2012, the Government consulted the public on a legislative proposal to provide a taxation framework for some common types of Islamic bonds comparable to that for their conventional counterparts. In view of the positive responses, the Government will introduce the related Inland Revenue and Stamp Duty Legislation (Alternative Bond Schemes) (Amendment) Bill 2012 into the Legislative Council in January 2013.
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The Bond Fund is not treated as part of the fiscal reserves and is managed separately from other Government accounts. It is used to repay principal, meet the financial obligations and liabilities associated with the GBP, and make investments.
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