ENG-2002 — Page 116

FINANCIAL AND MONETARY AFFAIRS

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individual exchange participants trading on the SEHK and 131 exchange participants trading on the HKFE.

Securities transactions on the SEHK are executed by the Automatic Order Matching and Execution System (AMS). The launch of the third generation of the system, AMS/3, in 2000 introduced new trading facilities and investors access channels that made possible more sophisticated securities trading. Straight-through online trading has also become possible.

The HKEX has developed a new market structure for Exchange Traded Funds (ETF), which are open-ended mutual funds or unit trusts listed or traded on stock exchanges.

The SEHK introduced new Main Board Listing Rules in July to allow a wider range of derivative products, including Equity Linked Instruments (ELI), to be listed on the SEHK. The ELI combines the features of a fixed income instrument and a stock option. Its performance is linked, in whole or in part, to the market performance of the underlying equity security. The first ELI was listed on the exchange on August 5. At year-end, there were 812 companies listed on the Main Board with a total market capitalisation of $3,559.1 billion, raising an aggregate of $101.4 billion within the year. Moreover, the 166 companies listed on the Growth Enterprise Market had a total market capitalisation of $52.2 billion, and raised altogether $9.1 billion within the year.

Derivative trading is executed by the Hong Kong Futures Automated Trading System (HKATS). The HKEx is now working on the integration of futures and options clearing on the new Derivatives Clearing and Settlement System (DCASS).

New products.continued to come into place in 2002. The HKEx introduced Dow Jones Industrial Average (DJIA) Futures for trading on the HKFE in May. It enables investors to respond quickly to corporate announcements or other market events before or after regular US trading hours.

In addition, the HKEx launched Mini-Hang Seng Index (Mini-HSI) Options for trading in November. The contract multiplier for Mini-HSI Options is one-fifth the contract multiplier for the Hang Seng Index (HSI). Mini-HSI Options provide an opportunity for more retail investors to participate in the stock index options market. The Hong Kong Securities Clearing Company (HKSCC), a wholly-owned subsidiary of the HKEx, operates the Central Clearing and Settlement System (CCASS) for securities trading at the SEHK. The CCASS is an automated book-entry system that handles the settlement of securities. In addition to brokers and custodians, CCASS services are also available to retail investors.

The HKEx has begun introducing CCASS/3, the new generation of the system in phases since May. The CCASS/3 network connection has been designed to provide an integrated access to the FinNet currently operated by the SFC, which was built to connect financial institutions in Hong Kong to effect straight-through-processing and ultimately real-time financial transactions.

Upon full implementation, the open-interface architecture of the CCASS/3 will enable HKEx to respond quickly to changing market demands. The CCASS/3 will also be able to support more regional and global products with different features and settlement periods. It will improve the operational efficiency of the market and market participants.