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ASAF 2001 Conference Hong Kong: Asia - The Third Global Financial Zone 4 December 2001 Rising to the new challenges HKEx’s Response Mr K C Kwong Chief Executive Hong Kong Exchanges and Clearing Limited 1 Macro Factors Reshaping the Global Financial Market Globalisation Technological advances 2 The Hong Kong Response Reform of the Securities and Futures Markets Demutualisation and merger of Two exchanges : SEHK and HKFE Three markets: Stock, Futures and Options Three clearing houses: Stock, Futures and Options Formation of the Hong Kong Exchanges & Clearing Ltd: listed on the Stock Exchange in June 2000 3 Commercial Interest Vs Public Interest Commercial role Shareholder value Profitdriven Regulatory role Protection of Investors Orderly Market 4 HKEx Offers a Full Spectrum of Products and Services Initial Public Offering Issuer or Investor communications Securities and Derivatives markets Order Trade + Confirmation Clearing Settlement Information Services PRIMARY MARKET SECONDARY MARKET 5 Improvement to Financial Infrastructure Complete rollout of AMS/3 functionalities Derivatives Trading Integration Clearing Systems Upgrade Introduction of a Common Financial Network 6 Complete rollout of AMS/3 functionalities October 2000: Introduction of Third Generation Automatic Order Matching and Execution System (AMS/3) Benefits Brings greater convenience and flexibility to the market Facilitates straight through processing Enables the operation of multiple markets 7 Derivatives Trading Integration August 2001: Migration to Hong Kong Futures Automated Trading System (HKATS) Broadening distribution: Offer Remote Trading Access to HKATS Direct Access for Overseas Customers Partnering with GL Trade / Radianz 8 Clearing Systems Upgrade Central Clearing and Settlement System (CCASS/3) Derivatives Clearing and Settlement System (DCASS) Common Risk Management System (CRMS) Common Collateral Management System (CCMS) 9 FinNet - A Common Financial Network MPF Managers Overseas Systems Independent Securities Brokerage Financial Planners Houses Payment System Stock Exchange Options Exchange Banks RTGS DvP Futures Exchange Insurance Companies FinNet STP Regulatory Bodies Law Firms PvP TvP Independent Mortgage Brokers Independent Insurance Agents Boutique Financial Companies 10 Product and Services Development Introduce products international benchmark financial Introduce Exchange Traded Funds Explore front-end and back-end services Expand registrar, nominee and related services Enhance investor information services 11 Market Regulation Rationalisation of Main Board and Growth Enterprise Market Listing Rules, and listing approval procedures New Securities and Futures Ordinance Enhanced market surveillance 12 Conclusions HKEx aims: to become the leading full-service Asian market to become the Asian time-zone pillar in the global securities and derivatives markets to be the preferred Asian partner for other major equities and derivatives exchanges seeking to build global alliances to be the key international capital market for the Mainland China 13 Thank you 14