ENG-2006 — Page 103

Financial and Monetary Affairs ❘ 75

The SEHK operates the Third Generation Automatic Order Matching and Execution System (AMS/3) for securities trading. AMS/3 provides an electronic platform for trading equities, debt securities, exchange-traded funds, unit trusts/mutual funds, derivative warrants and equity linked instruments. It also provides facilities and investor access channels that make securities trading more accessible.

The Hong Kong Securities Clearing Company Limited (HKSCC), a wholly owned subsidiary of the HKEX, operates the third generation of the Central Clearing and Settlement System (CCASS/3) for clearing and settlement of securities transactions concluded at the SEHK. The CCASS/3 is an automated book-entry system that operates on an open architecture. In addition to brokers and custodians, certain CCASS services are also available to retail investors. For example, investors may open Investor Participant Accounts with the clearing company to keep their securities in CCASS

The HKFE operates the Hong Kong Futures Automated Trading System for the trading of futures and options contracts and the Derivatives Clearing and Settlement System (DCASS) for the clearing and settlement of such contracts. DCASS shares the same common database and system infrastructure as the trading system.

HKEx is migrating the three networks above and the Market Data Feed System onto a single new network, SDNet, utilising latest technologies. SDNet enables brokers and participants to use a more reliable network at lower network costs. The first three phases of migration were completed in December 2006 and the last phase of the migration is scheduled for completion by the second quarter of 2007.

At year-end, there were 12 automated trading services providers, comprising mainly foreign exchanges and regulated entities, authorised by the SFC under section 95 of the Securities and Futures Ordinance (SFO) to provide automated trading services in Hong Kong. Automated trading services are services provided by means of electronic facilities, not being facilities provided by a recognised exchange company or a recognised clearing house, to transact or settle transactions in securities or futures contracts.

Securities and Futures Commission

The SFC was established in May 1989 following the enactment of the Securities and Futures Commission Ordinance (SFCO). The regulatory objectives of the SFC, as set out in the SFO that came into effect on April 1, 2003, are:

• to maintain and promote the fairness, efficiency, competitiveness, transparency and orderliness of the securities and futures industry;

• to promote public understanding of the operation and functioning of the securities and futures industry;

⚫ to provide protection for members of the public investing in or holding

financial products;

• to minimise crime and misconduct in the securities and futures industry;