ENG-1994 — Page 104

FINANCIAL AND MONETARY AFFAIRS

ì

82

deposits, deregulation will be phased in, by gradually lowering the deposit cap during the rest of 1995, subject to the condition that both the HKMA and the Hong Kong Association of Banks are satisfied that the stability of the monetary and banking systems would not be undermined.

Applicants for restricted bank licences are required to have a minimum issued and paid-up capital of $100 million, and to meet certain criteria regarding ownership, general standing and quality of management. If incorporated overseas, the applicants must also be subject to adequate home supervision. Restricted licence banks may take deposits of any maturity from the public, but in amounts of not less than $500,000. There are no restrictions on the interest rates they may offer. At the end of 1994, there were 63 restricted licence banks and their total deposit liabilities to customers was $37 billion.

Restricted licence banks may use the word 'bank' in describing their business in promotional literature and advertisements, but this must be qualified by adjectives such as 'restricted licence', 'merchant', 'investment' or 'wholesale'. To avoid confusion with licensed banks, descriptions such as 'retail' or 'commercial' are not allowed. Overseas banks seeking authorisation as restricted licence banks may operate in branch or subsidiary form. If in branch form, they may use their registered name even if it includes the word 'bank' or a derivative, but in this case it must be qualified prominently by the words 'restricted licence bank' in immediate conjunction.

In addition to certain basic criteria, registration of deposit-taking companies will be granted only to companies that are more than 50 per cent owned by a bank. 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 to maturity of at least three months. At the end of 1994, there were 137 deposit-taking companies, and their total deposit liabilities to customers was $20 billion.

Dealers in securities, investment advisers, commodity dealers and commodity-trading advisers, leveraged foreign exchange traders, 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 Commodities Trading Ordinance, the Leveraged Foreign Exchange Trading Ordinance, and the Securities and Futures Commission Ordinance. At the end of 1994, there were 14 191 registered persons. Of the 421 registered corporate securities dealers, 199 were from overseas. Of the 128 commodities dealers, 54 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 563 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 1994, the Futures Exchange had 115 members.

Under the Insurance Companies Ordinance, insurance companies are authorised by the Insurance Authority to transact business in Hong Kong. At the end of 1994, there were 229 authorised companies. Of these, 126 were overseas companies from 29 countries.

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