ENG-2018 — Page 105

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Financial and Monetary Affairs

Corporate Treasury Centres

Hong Kong is a premier location for multinational corporations to establish corporate treasury centres (CTCs) to manage their regional and global treasury activities. The Inland Revenue Ordinance allows interest deduction in calculating profits tax for the intra-group financing business of corporations operating in Hong Kong under specified conditions, and reduces qualifying CTCs' profits tax for specified treasury activities by 50 per cent. In 2018, the half-rate concessions were extended to profits derived from domestic transactions.

Regulation of Asset and Wealth Management

The SFC seeks to ensure Hong Kong's regulatory regime for asset and wealth management is in line with international regulatory developments in order to facilitate orderly development of the sector. New requirements on refining asset management regulation and point-of-sale transparency to better address conflicts of interest in the sale of investment products took effect in 2018. Following a public consultation in the year, an updated Code on Unit Trusts and Mutual Funds, meant to strengthen requirements for key operators of SFC-authorised funds and introduce new fund types such as active ETFs, will take effect in January 2019.

Regulation of OTC Derivatives

In line with G20 commitments to reform OTC derivatives markets, the HKMA and the SFC are working on implementing an OTC derivatives regulatory regime in Hong Kong. Notably, the SFC issued in December consultation conclusions on its proposals to enhance the OTC derivatives regime and address conduct risks posed by dealings with group affiliates and other connected persons.

Insurance

Hong Kong is one of the most open insurance centres in the world, with the highest insurance density in Asia in 2018. Of the 161 authorised insurers operating in the city at the end of 2018, 72 were from the Mainland or overseas jurisdictions. Thirteen of the world's top 20 insurers were authorised to conduct insurance business in Hong Kong either directly or through a group company. The city had 16 professional reinsurers, including most of the world's top reinsurers.

Chart 6

Annual Gross Premiums of Insurance Market

HK$ Billion

600

500

532*

489

400

452

300

374

339

200

100

*Provisional statistics

2014

2015

2016

2017

2018

Year

67

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