ENG-2009 — Page 121

Financial and Monetary Affairs 73

creating stronger competition in the market and encouraging more active management of MPF investments by employees.

Modernising the Companies Ordinance and other Legislative Amendments

The Standing Committee on Company Law Reform (SCCLR) advises the Government on reviews and reforms of Hong Kong's company laws and on enhancing corporate governance. Many of the legislative amendments recommended by the SCCLR have been adopted over the years.

The draft Companies Bill, which aims to enhance further Hong Kong's status as a major international business and financial centre, is undergoing public consultation in two phases.

Review of the Trustee Ordinance

The Government completed its consultation on a Trustee Ordinance review in September 2009. Legislative amendments will be introduced to provide a better framework for the operation of trusts in Hong Kong, strengthen the competitiveness of Hong Kong's trust services industry and enhance Hong Kong's position as a major asset management centre.

Enhancement of the Financial Infrastructure

Hong Kong has a robust Real Time Gross Settlement (RTGS) interbank payment system. All banks in Hong Kong maintain settlement accounts with the HKMA through the Hong Kong dollar RTGS system. All RTGS payment transactions are settled in real time. The banks may obtain intraday liquidity through intraday repurchase agreements with the HKMA using the Exchange Fund Bills and Notes (EFBNs) as collateral.

US dollar, Euro and Renminbi RTGS systems also enable transactions in these currencies to be settled in real time, reducing or eliminating settlement risk. RTGS systems in Hong Kong are linked to enable foreign-exchange transactions to be settled on a payment-versus-payment (PvP) basis.

The HKMA operates the Central Money markets Unit (CMU) to provide clearing and custodian services for EFBNs and other Hong Kong dollar or foreign-currency private debt securities. It is linked to a number of international and regional central securities depositories to enable overseas investors to trade CMU securities.

Through its integration with the RTGS systems, the CMU enables securities to be settled on a delivery-versus-payment (DvP) basis, enhancing settlement efficiency and eliminating settlement risk. The interface also enables users of RTGS systems to access intraday liquidity through automatic intraday repurchase agreements.

The Government, regulators, and the HKEX are committed to ensuring a safe and efficient financial infrastructure in Hong Kong. For example, the HKMA is devoted to providing a multi-currency, multi-dimensional platform. It is also developing Hong Kong as a payment and settlement centre in the region.

Major projects completed in 2009 include: