ENG-2014 — Page 100

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Financial and Monetary Affairs

the transfer of all ETFs, so that the transaction cost of ETFs with more than 40 per cent of Hong Kong stocks in their portfolios can be reduced as well to help promote the development, management and trading of ETFs. The relevant Stamp Duty (Amendment) Bill 2014 was introduced into the Legislative Council in December.

Real Estate Investment Trusts

The SFC's Code on Real Estate Investment Trusts (REITs) was amended in August to give REITS the flexibility to invest in property development activities and financial instruments, subject to relevant restrictions such that a REIT will maintain its profile as primarily a recurrent rental income generating vehicle. The amendments were made following public consultation and took account of developments in comparable overseas jurisdictions, as well as the protection of investors' interests and the long-term development of the Hong Kong REIT market.

Implementation of the New Companies Ordinance

The new Companies Ordinance commenced operation on 3 March. The new ordinance aims to enhance corporate governance, ensure better regulation, facilitate business and modernise the law, thereby strengthening Hong Kong's status as a major international business and financial centre. The Companies Registry has overhauled its IT system, specified new forms and carried out a series of promotional and educational activities to enhance public awareness of the major changes introduced by the new ordinance.

Improvement of Corporate Insolvency Law

In 2013, the government conducted public consultation on legislative proposals intended to facilitate more efficient administration of the winding-up process and increase protection of creditors through streamlining and rationalising the company winding-up procedures and enhancing regulation of the winding-up process having regard to international experience. The consultation conclusions were published in May and on the basis of the respondents' support for the legislative exercise, the government plans to introduce an amendment bill into the Legislative Council in 2015.

Development of the Bond Market

The Government Bond Programme (GBP) was established in 2009 to promote the sustainable development of the bond market in Hong Kong. It has a borrowing ceiling of $200 billion.

Bonds totalling $20 billion were issued to institutional investors under the GBP in 2014, attracting a diverse group of investors. In August, the government issued a $10 billion inflation- linked retail bond (iBond), with a tenor of three years, for the fourth time under the GBP to Hong Kong residents to promote further development of the retail bond market in Hong Kong. At the end of 2014, outstanding HKD debts, including EFBNs, totalled $1.41 trillion.

Developing Islamic Finance

In March, the Loans (Amendment) Ordinance 2014 was enacted by the Legislative Council to enable the issuance of Islamic bonds (sukuk) under the GBP. In September, the government successfully offered its inaugural US$1 billion five-year sukuk, the world's first USD-denominated sukuk originated by an AAA-rated government. The sukuk saw strong demand from global

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