XN000022-1996-06-05 — Page 23

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(b)

(c)

a company the principal business of which is or will be the issuing or facilitating the issue of multi-purpose stored value cards (i.e. what we call "a special purpose vehicle") may be approved as a restricted licence bank or a deposit-taking company; and

the Monetary Authority would be given a discretionary power to exempt a stored value card from the regulatory regime.

In applying these criteria, it is our intention that the issue of "general purpose" multi-purpose stored value cards should be confined to licensed banks (which are the only entities having access to the payment system). The cards to be issued by "special purpose vehicles" will be more limited in scope. The exact extent of the scope will be specified in the guidelines to be developed by the Monetary Authority in consultation with the various interested parties. The multi-purpose stored value cards to be exempted from the regulatory framework would be those which can only be used to pay for an even more restricted range of low value goods and services.

The Bill does not provide for the regulation of single purpose stored value cards as they are similar to prepayment for specific goods and services. This kind of stored value cards is currently not subject to any regulation. Some Honourable Members have suggested that such cards should also be subject to a limit on the maximum value that can be stored on the card as a means to protect cardholders. We shall further study this suggestion and consider whether an amendment should be made at the Committee Stage.

Money Brokers

An orderly and efficient interbank foreign exchange and money market is very important to Hong Kong. The Hong Kong Association of Banks and the Hong Kong Foreign Exchange and Deposit Brokers Association have found self-regulation difficult because of a lack of statutory protection for them in exercising disciplinary actions. We propose that the Monetary Authority should be the authorisation authority for foreign exchange and deposit brokers. A formal authorisation regime will help ensure that high standards of integrity and fair dealing are observed by the brokers. The proposed regulatory framework has the support of both associations.

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