Second Paper
LegCo Paper No. CB(1) 2035 & 2045/95-96

Paper for the Bills Committee
on the Banking (Amendment) Bill 1996
Further Information and
Revised Committee Stage Amendments

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Introduction

This paper provides further information on multi-purpose stored value cards and money brokers and sets out the revised Committee Stage Amendments (CSAs) to the Banking (Amendment) Bill 1996 (the Bill).

Further information

2. At the Bills Committee meetings held on 17 and 18 July 1996, Members requested for further details on the following areas -

1. the nature of multi-purpose cards, their analogy with banknotes or deposits, the regulatory concerns on such cards, and the maximum limits on the amount stored on such cards in other countries;
2. the businesses being undertaken by deposit-taking companies (DTCs) and the regulatory requirements;
3. the long term implications of electronic money on the monetary system; and
4. the role of money brokers, the effect of the proposed regulation and the reason why some requirements are set out in authorization conditions rather than subsidiary legislation.

3. We have compiled at Annexes 1-4 four notes which set out detailed explanation on the above areas for Members’ information.

Revised Committee Stage Amendments

4. Taking account of the comments made by Members and further comments from the electronic brokers, we have proposed further CSAs to the Bill. A copy of the revised CSAs is at Annex 5.

5. The further revisions made to the CSAs are as follows -

1. Clause 6 - Section 15(3) - it was agreed at the last Bills Committee meeting that a special purpose vehicle for issuing or facilitating the issue of multi-purpose cards should only be authorized as a DTC. Section 15(3)(a) has been amended to this effect;
2. Clause 23 - Second Schedule - The fee for approval and renewal of approval for money brokers is proposed at the level of $44,800. This reflects the likely reality that the amount of work in approving and supervising a money broker would be more than that applicable to a local representative office but substantially less than that for a DTC; and
3. Clause 24 - Eleventh Schedule - Under paragraph 1(4) of the Seventh Schedule, in relation to an institution incorporated outside Hong Kong applying to be an authorized institution, the MA may regard himself as satisfied with respect to any matter relating to the criteria where the relevant banking supervisory authority informs the MA that it is satisfied in relation to that matter. It is proposed that a similar provision should be included in the Eleventh Schedule so that the MA may rely on the opinion of a relevant overseas supervisor of a money broker in determining whether the money broker has satisfied any of the criteria set out in that Schedule.

Hong Kong Monetary Authority
September 1996

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