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Update on HKEx’s Latest Developments Mr Paul Chow HKEx Chief Executive 8 July 2003 1 Development Strategy HKEx is committed to reinforcing and developing the Hong Kong markets as: The key international capital market for Mainland and Hong Kong enterprises; The Asian time-zone pillar in the global securities and futures markets; The preferred Asian partner for major equities and derivatives exchanges seeking to build global alliances. 2 Development Strategy In the longer term, HKEx will join with other financial institutions and professionals to work towards the following objectives: Assist Mainland enterprises and investors in moving into the international market; Establish a rating mechanism appropriate for the region and develop a new rating service industry in the region; Become the most important investment and fund management centre in the Asian time zone where analysts assemble; and Integrate with the Shanghai and Shenzhen markets upon full convertibility of renminbi to develop into Asia’s biggest financial market. 3 Strengthened Corporate Structure Corporate structure was revised in June to strengthen operational efficiency: Main structural changes involved the Exchange Business Unit and the Listing, Regulation and Risk Management Unit which was renamed the Listing Unit; Streamlining resulted in some redeployment and redundancies; Corporate restructuring has been completed but workflow review continues; Staff salaries continue to be reviewed annually based on individual performance. 4 Revised Corporate Structure Chief Executive Paul Chow Chief Operating Officer Patrick Conroy Chief Operating Officer Exchange Lawrence Fok Deputy Chief Operating Officer Head - Exchange Clearing Walter Reisch Head - Clearing China Development & Listing Promotion Cash Market Development & Operations E-Business & Information Services Roger Lee Head - E-Business & Information Services IT/Systems Stephen Law Head IT/Systems Listing Richard Williams Head - Listing Corporate Finance Finance Expert Department Treasury Regulatory Discipline Derivatives Market Development & Operations Participants Admission & Surveillance Finance, Treasury, Administration & Risk Management Karen Lee Chief Financial Officer Administration Risk Management Legal & Secretarial Services Mary Kao Head - Legal & Secretarial Services Corporate Communications Henry Law Head - Corporate Communications Internal Audit Coven Hui Head - Internal Audit Research & Planning Matthew Harrison Head - Research & Planning Human Resources Brenda Yen Head - Human Resources 5 Looking Ahead Listing Matters: The Government’s consultation on the listing regime; Amendments to Listing Rules relating to corporate governance issues; Conclusions on the consultation on proposed amendments to Listing Rules regarding sponsor regulation; and Conclusions on the consultation on initial and continuous listing eligibility criteria and delisting mechanism 6 Looking Ahead Market Facilities: Upgrade of HKATS to OM 17.1 Integration of derivatives clearing Enhancement of Investor Account in CCASS Third Party Clearing Scripless market model Consolidation of clearing houses Consultation on narrowing minimum spreads 7 Looking Ahead Development of Products and Services: Exploration of new financial products and review of existing products Development of energy derivatives Capital Protected Instruments Equity Linked Instruments Regional Exchange Traded Funds Stock Options Interest Rate Swap Futures 8 Market Highlights Market Statistics (as of 30 June 2003) Number of listed companies Main Board 824 GEM 175 Newly listed companies this year 16 12 Average daily turnover this year 6,956 mil 103 mil Market capitalisation 3,907,287 mil 60,965 mil Price earnings ratio 13.90 28.13 IPO funds raised this year 6,541 mil 577 mil Number of H share companies 58 22 Number of Red Chip companies 71 1 9 Market Highlights 2003 (Jan – Jun) *contract size increased by 5 times from 27 May 2002 Total Turnover Volume 2002 Average Daily Volume Total Turnover Volume Average Daily Volume Hang Seng Index Futures 2,996,057 24,761 4,802,422 19,602 Mini-Hang Seng Index Futures 564,016 4,661 1,107,964 4,522 1,111,397 9,185 1,070,405 4,369 3-Month HIBOR Futures* 24,729 204 280,257 1,144 1-Month HIBOR Futures* 50 0 970 4 1,768,279 14,614 3,724,705 15,203 HSI Options Stock Options 10 Thank you 11