ENG-2004 — Page 114

84 | Financial and Monetary Affairs

At year-end, there were 892 companies listed on the Main Board of the SEHK with a total market capitalisation of $6,629.2 billion, raising an aggregate of $265.7 billion within the year.

New products continued to be launched in 2004. To meet market demand created by the growth of the H-shares market, an option contract on the H-shares index was launched in June 2004 to complement the H-shares index futures contract (introduced in December 2003). Additional stock options and futures contracts on four H-shares were introduced in June 2004. Two Exchange Traded Funds (ETFs), the Hang Seng Index ETF and the iShares FTSE/Xinhua A50 China Tracker, were also listed on the SEHK.

Securities transactions on HKEx's securities market are executed by the Third Generation Automatic Order Matching and Execution System (AMS/3) which provides facilities and investor access channels that make securities trading more accessible. The system has maintained 100 per cent uptime record for four consecutive years since its launch in October 2000. The AMS/3 provides an electronic platform for trading of equities, debt securities, exchange traded funds, unit trusts/mutual funds, derivative warrants and equity linked instruments.

The Hong Kong Securities Clearing Company Limited (HKSCC), a wholly owned subsidiary of HKEX, operates the third generation of the Central Clearing and Settlement System (CCASS/3) for clearing and settlement of securities transactions at the SEHK. In addition to brokers and custodians, certain CCASS services are also available to retail investors. For example, investors may open Investor Participant Accounts with CCASS to keep their securities separately. The CCASS/3 is an automated book-entry system that operates on an open architecture. The CCASS/3 network is connected to FinNet, which was built to provide a single connection to access major financial services in Hong Kong and improve straight-through processing of financial transactions.

In April 2004, HKEX introduced an integrated clearing and settlement system for its derivatives market, known as the Derivatives Clearing and Settlement System (DCASS), to replace the two separate systems for stock options and futures markets. DCASS shares the same common database and system infrastructure as the Hong Kong Futures Automated Trading System (HKATS). The implementation of DCASS has not only harmonised clearing arrangements for the derivatives market, but also improved the operational efficiency from trading to settlement.

Securities and Futures Commission

The SFC was established in May 1989 following enactment of the Securities and Futures Commission Ordinance (SFCO). This represented the first important phase in overhauling the regulation of securities and futures markets in Hong Kong, and the implementation of one of the most important recommendations made by the Securities Review Committee in May 1988.