ENG-2010 — Page 119

Financial and Monetary Affairs 1 77

as registered holders, thus offering more opportunities for straight-through- processing to enhance market efficiency. To lay the foundation for the implementation of a scripless securities market in Hong Kong, the Government introduced the Companies (Amendment) Bill 2010 into Legislative Council. This was passed in July 2010. The Companies (Amendment) Ordinance 2010 removes the existing limitations in the Companies Ordinance that compel the issue or use of paper documents of title and transfer, and represents an important first step in the entire legislative process for implementing the scripless initiative.

Development of the Bond Market

The Government has boosted development of the bond market in recent years by providing it with the necessary financial infrastructure, simplifying the issuance process, optimising regulatory arrangements, offering tax incentives, encouraging public corporations to issue bonds and strengthening education for bond investors.

To promote further development of the local bond market, in July 2009 the Government obtained Legislative Council's approval to implement the Government Bond Programme (GBP), under which the Government is authorised to issue bonds. with an aggregate outstanding principal of up to HK$100 billion and to set up the Bond Fund to manage the sums raised under the GBP. The Bond Fund is not treated as part of the fiscal reserves and is managed separately from other Government accounts. It is used to repay principal, meet the financial obligations and liabilities associated with the GBP, and make investments.

In 2010, seven issues of Government bonds for institutional investors were made, attracting a diverse group of investors.

The banks' demand for short-dated Exchange Fund paper eased in 2010. The HKMA issued HK$116 billion of additional 91- and 182-day Exchange Fund Bills. It also continued to fine-tune the maturity mix of EFBNs with increased issuance of 5-, 10- and 15-year Exchange Fund Notes.

Outstanding Hong Kong dollar debts, including EFBNs, exceeded $1,248 billion at the end of 2010.

Anti-Money Laundering and Counter Financing of Terrorism

Hong Kong has put in place an effective anti-money laundering (AML) and counter financing of terrorism (CFT) regulatory regime to maintain a safe business and investment environment. A high-level Central Co-ordinating Committee on AML and CFT, chaired by the Financial Secretary, is in place to steer policy in this area. To enhance the AML/CFT regime applicable to the financial sectors to align better with international standards, an Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Bill was introduced into the Legislative Council on November 10, 2010. Subject to the council's approval, the new legislation is expected to commence operation in 2012.

Developing a Statutory Corporate Rescue Procedure

A three-month public consultation on the legislative proposals for a statutory corporate rescue procedure was completed in January 2010 and the consultation