ENG-2019 — Page 106

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Financial and Monetary Affairs

companies with weighted voting rights structures, and qualifying issuers seeking a secondary listing on the SEHK through a new concessionary route.

The listing regime caters for fund-raising needs in the new economic environment and makes Hong Kong's listing platform more attractive to issuers from different jurisdictions, thereby strengthening the city's overall competitiveness vis-à-vis other major international listing venues. As at the year end, 17 companies were listed successfully on the SEHK under the new regime.

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. In December, the SFC issued consultation conclusions on its proposals to impose margin requirements for non-centrally cleared OTC derivatives transactions.

Commodity Trading

Hong Kong operates one of the most active physical gold markets in the world and is among Asia's largest OTC gold trading centres. Spot gold can be traded through two closely related yet independent markets: the Chinese Gold and Silver Exchange Society and the Loco London gold market. Prices track closely those in the major gold markets in London, Zurich and New York.

In addition to operating Hong Kong's securities and derivatives markets, the HKEX owns the London Metal Exchange (LME), the world centre for industrial metals trading and price-risk management. More than three-quarters of global non-ferrous business are conducted on the LME and its prices are used as global benchmarks. The average daily volume in 2019 was 696,567 lots. The LME's in-house clearing house in London, LME Clear, supports the exchange's commodity business.

Bond Market Development

Hong Kong is a major bond market in Asia. Outstanding HKD debt securities, including EFBNs, totalled $2,165.9 billion at the end of 2019. Hong Kong ranked third in local-currency- denominated bond issuance in Asia excluding Japan, after the Mainland of China and Korea. The government develops the bond market using three strategies:

stimulating growth through government issuances of institutional and retail bonds, including green bonds;

⚫ building market infrastructure, such as the CMU and Bond Connect, to ensure a safe

trading and settlement environment; and

• incentivising market development through subsidy schemes such as the Pilot Bond Grant Scheme, tax incentive schemes such as the Qualifying Debt Instrument Scheme, and other measures.

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