ENG-2013 — Page 104

4

Financial and Monetary Affairs

On 29 August 2013, the Central People's Government and the Hong Kong Special Administrative Region Government signed Supplement X to CEPA, which further strengthened co-operation in the following financial services:

(a) Banking: A Hong Kong bank's operating institution in the Mainland which has obtained approval to conduct RMB business for Hong Kong enterprises may provide service to enterprises in the Mainland that are recognised as owned by Hong Kong investors, even if the investors are based in a place other than Hong Kong;

(b) Securities: Allowing Hong Kong-funded securities companies to make reference to the securities assets being managed by the respective group when applying for Qualified Foreign Institutional Investors (QFII) status; allowing qualified Hong Kong- funded financial institutions to set up joint-venture fund management companies in the Mainland, and the Hong Kong-funded institutions' shareholding in the joint. venture can exceed 50 per cent; allowing Hong Kong-funded financial institutions which satisfy the requirements for establishing foreign-invested securities companies to set up one full-licensed joint venture securities company each in Shanghai, Guangdong Province and Shenzhen with the Hong Kong-funded institutions permitted to hold up to 51 per cent of the aggregate shareholding, and the Mainland shareholders are not restricted to securities companies; allowing Hong Kong-funded financial institutions which satisfy the requirements for establishing foreign-invested securities companies to set up one new full-licensed joint venture securities company each in certain reform experiment zones for 'piloting financial reforms' as approved by the Mainland with the Hong Kong-funded institutions permitted to hold up to 49 per cent of the aggregate shareholding and the requirement for a single Mainland shareholder to hold 49 per cent of shareholding in the joint venture removed; and allowing Hong Kong-funded securities companies to hold more than 50 per cent shareholding in joint venture securities investment advisory companies in certain reform experiment zones for 'piloting financial reforms' as approved by the Mainland; and

(c) Insurance: Supporting qualified Hong Kong insurers to take part in compulsory

traffic accident liability insurance business in the Mainland.

Banking Sector

Main Features

Hong Kong maintains three tiers of deposit-taking institutions: licensed banks (LBs), restricted licence banks (RLBs) and deposit-taking companies (DTCs). They are known collectively as 'authorised institutions' (Als) under the Banking Ordinances and are licensed by the HKMA.

7

8

Only LBS may conduct full banking services, including in particular the provision of current and savings accounts and acceptance of deposits of any size and maturity. RLBS may take deposits of any maturity of $500,000 or above. DTCs may take deposits of $100,000 or above with an original maturity of at least three months.

The Banking Ordinance provides the legal framework for banking supervision in Hong Kong. Under the ordinance, the HKMA is the licensing authority responsible for granting and revoking the authorisation of all Als, and the approval and revocation of money broker licences.

72