Part II Regulation of Banking, Securities, and Insurance, 3 Banking Regulation and the Hong Kong Monetary Authority

Subject(s):

Securities — Investment business

This chapter explains the legal and institutional framework for banking in Hong Kong. It discusses the regulation of financial intermediaries, products, and services in the context of a framework based largely on the Banking Ordinance, the Exchange Fund Ordinance, and the Clearing and Settlements Systems Ordinance, supported by ordinances derived from international best practice. The chapter summarizes the main functions of the Hong Kong Monetary Authority (HKMA). Established in 1993, the HKMA maintains Hong Kong as an international financial centre and ensures that Hong Kong’s legal and regulatory framework for banks is comprehensive and of an international standard. At the same time, the chapter argues, the system’s many divisions allow certain risks to remain unaddressed. A specific area of concern applies to financial conglomerates, in that there is no clear division of regulatory responsibility in the case of the insolvency of a financial conglomerate.