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1
ASAF 2001 Conference Hong Kong Asia - The Third
Global Financial Zone 4 December 2001 Rising
to the new challenges - HKExs Response Mr K C
Kwong Chief Executive Hong Kong Exchanges and
Clearing Limited
2
Macro Factors Reshaping the Global Financial
Market

• Globalisation
• Technological advances

3
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

4
Commercial Interest Vs Public Interest
Regulatory role
Commercial role
Profit- driven
Shareholder value
Protection of Investors
Orderly Market
5
HKEx Offers a Full Spectrum of Products and
Services
Information Services
Settlement
Clearing
Trade Confirmation
Order
Issuer or Investor communications
Initial Public Offering
PRIMARY MARKET
Securities and Derivatives markets
SECONDARY MARKET
6
Improvement to Financial Infrastructure

• Complete rollout of AMS/3 functionalities
• Derivatives Trading Integration
• Clearing Systems Upgrade
• Introduction of a Common Financial Network

7
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
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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

9
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)

10
FinNet - A Common Financial Network
MPF Managers
PvP
RTGS
FinNet
DvP
TvP
STP
Independent Mortgage Brokers
11
Product and Services Development

• Introduce international benchmark financial
  products
• Introduce Exchange Traded Funds
• Explore front-end and back-end services
• Expand registrar, nominee and related services
• Enhance investor information services

12
Market Regulation

• Rationalisation of Main Board and Growth
  Enterprise Market Listing Rules, and listing
  approval procedures
• New Securities and Futures Ordinance
• Enhanced market surveillance

13
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

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Thank you