80 | Financial and Monetary Affairs
eligible OTC derivatives transactions at recognised CCPs and to report all OTC derivatives transactions to authorised TRs. The HKEx has decided to develop a CCP in Hong Kong to cover OTC derivatives such as interest rate swaps and non- deliverable forwards for currencies. For market surveillance, the HKMA will develop a local TR for collecting and disseminating data on OTC derivatives trades conducted in Hong Kong. The SFO will be amended to empower the SFC to make rules to impose mandatory trading, clearing and reporting requirements.
Financial Links with the Mainland
Strengthening our financial co-operation with the Mainland is vital for our financial services, which are positioned and developed to increase our contribution in the modernisation of the Mainland's financial system.
There has been a steady flow of funds between financial institutions on both sides of the boundary. Over the years, the Mainland has accumulated a substantial amount of funds in Hong Kong dollars from trading activities and inward investment. These funds are placed with financial institutions in the Mainland and are subsequently channelled back to Hong Kong through the inter-bank market.
By the end of 2010, the external liabilities of authorised institutions (Als) to banks in the Mainland amounted to $299.1 billion, while their claims on banks in the Mainland totalled $1,061 billion. These sums represent 9.2 per cent and 21.6 per cent respectively of Als' total liabilities to and claims on banks outside Hong Kong.
The Mainland's budding fund management industry has prompted Hong Kong- based fund managers to form joint ventures with their Mainland counterparts. Hong Kong fund managers have also paved the way for investors to seize investment opportunities in the Mainland. At year end, there were 52 SFC-authorised funds with significant exposure to A-shares and 24 Exchange-traded Funds (ETFs) that track the A-share market, as well as funds that invest indirectly in A-shares via equity-linked investments issued by qualified foreign institutional investors, and guaranteed funds with their upside potential returns linked to A-share market performance.
Capital Formation Centre and Global Investment Platform for the Mainland
Hong Kong's fundamental strengths, enhanced by its high market liquidity, a robust regulatory system, efficient information flow, a rich pool of financial professionals and proximity to the Mainland market, make it an ideal provider of top class services to Mainland enterprises seeking listing in the city.
The growing presence of Mainland issuers in Hong Kong has increased the breadth and depth of Hong Kong's securities and futures markets. Hong Kong's equity market has evolved from one with a high concentration of property and financial businesses to one with a great diversity of constituent stocks and a wide range of products.
Mainland enterprises also raise capital in Hong Kong through the issuance of bonds, project financing and loan syndication. In addition, they have easy access to
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