ENG-2009 — Page 131

Financial and Monetary Affairs 83

derivative warrants was $1,655 billion during the year. Stock options turnover decreased from 54 692 865 contracts in 2008 to 47 439 896 contracts in 2009.

In the derivatives market, there were some new records. Turnover of Mini Hang Seng Index Futures and options recorded turnover of 9 279 877 contracts and 286 591 contracts respectively, rising 17 per cent and 83 per cent from 2008. Turnover of H-shares Index options was 1 961 131 contracts, the highest ever. There was also record high open interest for Mini Hang Seng Index futures and options and H-shares Index options.

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In the futures market, around 99 million futures and options contracts were traded in 2009, slightly lower by 6 per cent than in 2008. The Hang Seng Index Futures and the H-shares Index Futures recorded a turnover of 20 728 034 contracts and 12 394 116 contracts respectively, falling 5 per cent and 14 per cent from 2008.

At year end of 2009, there were 13 automated trading services providers, comprising mainly foreign exchanges and regulated entities, authorised by the SFC 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, which was replaced by the Securities and Futures Ordinance (SFO) that came into effect on April 1, 2003. Established as an autonomous statutory body, the SFC is responsible for regulating the securities and futures markets in Hong Kong. The SFC has a governing body of 14 directors appointed by the Chief Executive. The Government is not involved in the day-to-day regulation of the securities and futures industry.

The SFC is funded by the market. No government funding has been sought since 1993. Its total expenditure in 2009-10 is estimated to be $793 million.

The exercise of powers by the SFC is subject to a range of checks and balances. For instance, a wide range of SFC decisions are subject to appeal at the independent Securities and Futures Appeals Tribunal. The Process Review Panel for the SFC (PRP) was established in 2000 to review and advise the SFC on the adequacy of the internal procedures and operational guidelines governing the actions and operational decisions it takes in the performance of its regulatory functions. The PRP's eighth annual report, which was published in September 2009, concluded that the SFC had generally followed its internal procedures in handling cases under review.

Broadly speaking, the SFC's work involves licensing, supervision and monitoring of intermediaries; regulation of the public marketing of collective investment