ENG-1996 — Page 108

FINANCIAL AND MONETARY AFFAIRS

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Restricted licence banks may use the word 'bank' in describing their business in promotional literature and advertisements, but this must be qualified by a description 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.

Besides the criteria which apply to other authorised institutions, registration of deposit-taking companies will generally be granted only to companies that are 50 per cent or more owned by a bank (or, exceptionally, by another fully supervised financial institution). 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 1996, there were 124 deposit-taking companies, with total deposit liabilities to customers of $15.5 billion.

Dealers in securities, investment advisers, commodity dealers and commodity- trading advisers, leveraged foreign exchange traders and their representatives have to register with the Securities and Futures Commission (SFC). To obtain registration, they must comply with the requirements 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 1996, there were 17 892 registered persons. Of the 715 registered corporate securities dealers, 241 were from overseas. Of the 474 commodities dealers, 78 were from

overseas.

Only members of the Stock Exchange Hong Kong Ltd (SEHK) may trade on the stock exchange. At the end of 1996, 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 (HKFE) can trade on the futures exchange. At the end of 1996, the HKFE had 134 members.

Under the Insurance Companies Ordinance, insurance companies are authorised by the Insurance Authority to transact business in Hong Kong. At the end of 1996, there were 223 authorised companies. Of these, 123 were overseas companies from 28 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 standards and confidence in the institutional framework, but without unnecessary impediments of a bureaucratic or fiscal nature.

Authority for the prudential supervision of banks, restricted licence banks and deposit-taking companies is vested in the HKMA. Its authority is derived from the Banking Ordinance, the provisions of which relate to the supervision of authorised institutions. The main objectives of the ordinance are to provide a measure of protection to depositors and to promote the general stability and effective operation of the banking system.