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Following is the translated version of the full text of the speech by the Financial Secretary, Mr Donald Tsang, at Hongkong Clearing's tenth anniversary reception this (Monday) evening :

Mr Chan, ladies and gentlemen,

This is the reception to celebrate the tenth anniversary of Hongkong Clearing. The Company has made significant contributions to the financial markets in Hongkong in the past decade. I would like to take this opportunity to congratulate and thank the Board of Directors and staff of Hongkong Clearing.

When it was incorporated in 1989, Hongkong Clearing was charged with the important responsibility of developing the Central Clearing And Settlement System (CCASS) to reduce the risks involved in securities clearing and settlement. With the determination and hard work of its Board of Directors and staff, the Company was able to overcome all hardships and launched CCASS in 1992. CCASS has been providing a reliable and efficient service since it became operational, hence greatly strengthening investor confidence. It has been one of the key factors behind the giant strides the Hong Kong securities market has made over the past decade.

Hit by the Asian financial crisis, the market faced unprecedented challenges. However, CCASS continued to function normally and reduced the risk exposure of the market, helping us sail through the turmoil.

As we approach the 21st century, we are facing new challenges brought by the globalisation of international markets, advancement of technology and new ways of investment. To remain a leading international financial centre and become the New York and London of Asia, Hong Kong has to increase its competitiveness. In March 1999, I proposed a three-pronged market reform which includes the merging of the two exchanges and three clearing houses, the enhancement of market infrastructures and a reform on the regulatory framework. The merger proposal has been approved by the majority of members of the two exchanges and sanctioned by the Court.

With the help of the two exchanges and three clearing houses, the Preparatory Board of the Hong Kong Exchanges and Clearing Limited is now working on the operational details of the new company. During this transitional period, I believe Hongkong Clearing will continue to perform its duty to ensure the effective operations of CCASS.

Another major area of the market reform is to upgrade the trading, clearing and settlement facilities of the securities and futures markets. The Steering Committee on the Enhancement of Financial Infrastructure has published its report and made specific recommendations, which include the enhancement of CCASS, integration of cash and derivative clearing, automation of securities trading and the development of straight-through processing. I hope that Hongkong Clearing will continue to work closely with other organisations to implement these recommendations.

Hongkong Clearing has made significant progress in the last decade. Stepping into the new millennium, I have no doubt that the Company will continue its excellent work in providing a robust and reliable clearing and settlement system under the new market structure following the merger, and further strengthen Hong Kong's status as an international financial centre. I wish Hongkong Clearing every success in the future.

Thank you.

End/Monday, October 25, 1999

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