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Hong Kong Reviews Plans For Financial Services

Friday, March 9, 2012

Secretary for Financial Services and the Treasury, Professor K C Chan, has tabled a plan at the Legislative Council (LegCo) Finance Committee, whereby the government will continue to work closely with regulators and the industry to foster the sustained development of the financial services industry in Hong Kong.

Overall, Chan confirmed that his department will focus on leveraging Hong Kong’s competitive advantages to reinforce its status as an international financial centre. The key areas of work include further enhancing financial co-operation between Hong Kong and the Mainland (China), promoting market development and improving market quality.

In support of China’s National 12th Five-Year Plan, and through the Mainland and Hong Kong Closer Economic Partnership Arrangement and other regional co-operation platforms (including the ones between Hong Kong and Guangdong and Hong Kong and Shanghai, as well as Qianhai), collaboration will be fostered between financial institutions in Hong Kong and the Mainland, as well as in the exchange of financial products, capital and talents between the places.

In addition to the promulgation of the administrative rules on cross-border renminbi (RMB) foreign direct investment and the RMB Qualified Foreign Institutional Investor scheme, Hong Kong will continue to attract more overseas corporations and financial institutions to use Hong Kong's RMB clearing platform; and enhance Hong Kong's RMB capital formation platform by, for example, encouraging more Hong Kong, foreign and Mainland institutions and enterprises to issue RMB-denominated bonds in Hong Kong.

To reinforce further its position as an offshore RMB business centre, Hong Kong will also promote the development of more innovative RMB-denominated products, and expand and deepen the connectivity between Hong Kong's offshore RMB market and the onshore markets in the Mainland, to promote the cross-border use and circulation of RMB funds.

The government will continue to work with the Stock Exchange of Hong Kong to promote Hong Kong's strengths as the premier capital issuing centre to overseas countries, including emerging markets. Hong Kong Exchanges and Clearing Limited is reviewing and planning to conduct a consultation on the conditions for overseas companies to seek primary or secondary listings in Hong Kong, with the aim of further facilitating the listing of overseas companies in Hong Kong without compromising investor protection.

To strengthen further the competitiveness of the asset management industry, the government will, for example, enter into more comprehensive agreements for the avoidance of double taxation, continue to develop an Islamic financial platform, modernize the Trustee Ordinance and step up overseas promotion.

With regard to Islamic finance, Chan said that the government is close to finalizing draft amendments to the relevant legislation with a view to levelling the playing field for common types of Islamic bonds and their conventional counterparts as far as profits tax, property tax and stamp duty are concerned. The market will be consulted and it is planned that a bill will be presented to the LegCo for scrutiny in the next legislative session.

Finally, with regard to the regulatory regime, Chan highlighted the revamp of the Companies Ordinance (which should be passed within the current term of LegCo), and a modernization of the corporate insolvency law to facilitate a more efficient administration of the winding-up of companies, enhance the protection of creditors, and provide for a new statutory corporate rescue procedure.

In other areas, Hong Kong’s trust law will also be amended with a consultation being started this month, and the government is also working with the Securities and Futures Commission and the Hong Kong Monetary Authority to develop a regulatory regime for the over-the-counter (OTC) derivatives market. In addition, an independent Insurance Authority will be established to enhance protection for policyholders.

Chan pointed out that providing sufficient protection for investors is one of Hong Kong’s policy priorities, and, in addition to the establishment of a cross-sectoral investor education body to enhance the financial literacy of the investing public, funding approval has been obtained from the LegCo for the establishment of a Financial Dispute Resolution Centre by mid-2012, as an independent avenue for resolving monetary disputes between individual clients and financial institutions.