ENG-2004 — Page 112

82 | Financial and Monetary Affairs

The HKMA continued to work closely with the SFC in 2004 on implementation of the new securities regulatory framework, which aims, among other things, to uphold a level playing field between banks and non-bank financial intermediaries in the securities market. In 2004, the two regulators held five meetings in accordance with the arrangements set out in the Memorandum of Understanding between them. There was also reciprocal secondment of staff between the two regulators to facilitate transfer of knowledge and experience. Under the transitional arrangements of the Securities and Futures Ordinance (SFO), Als with deemed registration status are required to lodge migration applications to become Registered Institutions (RIs) by March 31, 2005 if they intend to continue to carry on regulated activities after this date. As of end-2004, 21 of the 90 Als with deemed registration status and seven other Als (being new registrants) had been registered as Rls under the SFO, and the HKMA had granted consent to 99 executive officers (who are responsible for supervising securities-related activities) of these Als. So far, the names and particulars of over 20 000 securities staff of Als have been recorded on the HKMA electronic public register. A dedicated enforcement team of HKMA staff was established to deal with Als' securities-related incidents with potential disciplinary concerns. An enforcement approach consistent with that of the SFC was adopted to ensure that actions taken against individuals and executive officers of Rls were based on the same yardstick used for SFC licensed individuals.

The HKMA continued to implement the policy initiatives contained in the reform programme announced in 1999. The bill to implement the proposed Deposit Protection Scheme was passed by the Legislative Council in May 2004 and the Hong Kong Deposit Protection Board was formed in July to oversee establishment of the scheme. A Commercial Credit Reference Agency (CCRA), through which credit information about small and medium-sized enterprises (SMEs) are shared among Als, was launched in November 2004. The establishment of the CCRA is an important addition to the banking infrastructure. It will help strengthen the credit risk. management of Als and assist SMEs with good credit history to obtain bank finance.

In view of the increasing number of suspected Automatic Teller Machine (ATM) skimming fraud cases reported in the second half of 2003, the HKMA worked closely with the banking industry and the Hong Kong Police Force to implement measures to combat such fraud. By mid-2004, all ATMs in Hong Kong were adequately protected by measures as recommended in a circular issued by the HKMA on October 14, 2003. All reported ATM fraud cases were satisfactorily settled and no new case has been received since November 2003. To help prevent future ATM fraud, an ATM Fraud Prevention Task Force (comprising the banking industry, the Hong Kong Police Force, ATM network operators and the HKMA) has been established to explore additional ATM security measures and develop a consumer education programme to increase public awareness of ATM security.

Separately, there has been an upsurge of reports concerning fraudulent bank websites and phishing e-mails since mid-2004. Up to the end of 2004, the HKMA has received 42 reports in relation to fraudulent bank websites. The HKMA has taken the matter seriously and issued a circular in June 2004 recommending that Als introduce