ENG-2006 — Page 102

74 | Financial and Monetary Affairs

Since November 2005, the HKMA has been working with the banking industry to ensure a high degree of preparedness for a possible pandemic outbreak in Hong Kong. An industry task force involving eight major banks was established by the HKMA to monitor the latest developments of avian influenza locally and globally and to review the business continuity planning practices. During the year, the HKMA also carried out a round of thematic examinations on the readiness of major Al's business continuity planning for a possible outbreak and issued further guidance to all Als. In June 2006, the HKMA published an article in the Quarterly Bulletin on pandemic outbreak, including a discussion of the HKMA's possible supervisory response and regulatory forbearance in case of an outbreak. The HKMA continued to work with banking supervisors in other major financial markets to enhance the framework for effective cross-boundary communication in emergency.

One of the functions of the HKMA is to promote and encourage high standards. of conduct and sound and prudent business practices among Als, primarily by way of the Code of Banking Practice. The code is issued by the industry associations and endorsed by the HKMA. It sets out the minimum standards to be followed by Als in their dealings with personal customers. The code is reviewed from time to time by the Code of Banking Practice Committee, which is convened by the industry associations.

Securities and Futures Sector

Main Features

The securities market in Hong Kong is operated by the SEHK and futures market, the Hong Kong Futures Exchange Limited (HKFE), both being wholly owned subsidiaries of the Hong Kong Exchanges and Clearing Limited (HKEx). At year-end, there were 469 exchange participants on the SEHK and 135 exchange participants on the HKFE.

By the end of 2006, there were 1 173 companies listed on the main board and the Growth Enterprises Market (GEM) of the SEHK with a total market capitalisation of about $13,338 billion, raising an aggregate of $524.5 billion within the year.

New products continued to be launched during the year. The first open-ended equity fund that directly invests in China A-shares via the fund manager's own Qualified Foreign Institutional Investors (QFII) quota was authorised in June 2006. An index fund which tracks the Indian market was listed on the SEHK in November, increasing the total number of Exchange Traded Funds (ETFs) traded on the SEHK to 11. It is envisaged that more ETFs will be listed in the coming year to further enrich the product base of the ETF market in Hong Kong. Callable Bull/Bear Contracts (CBBCs) began trading in June. At the initial launch, seven CBBCs were introduced by four issuers. In November, the number of Hong Kong stocks eligible for CBBC issuance was expanded from the initial five to 28. Three additional classes of stock options and futures based on individual stocks were also launched and starting from March, three additional long-dated options on Hang Seng Index and three additional long-dated options on H-share Index were available for trading.