The Monetary Authority has put forward a list of recommendations to improve the debt market development in Hong Kong.

The authority initiated a study on the debt market earlier this year. Following the completion of the review, it has made a number of recommendations refining the market-making system by providing incentives to encourage Market Makers to participate more actively in the trading of Exchange Fund Bills and Notes.

These include: 

* periodically publishing league tables of the best performing Market Makers and inviting only those Market Makers to participate in tenders;

* consideration will also be given replacing the existing multiple-price auctions of Exchange Fund Bills and Notes with single-price auctions;

* extending the benchmark Exchange Fund Notes yield curve to beyond 10 years;

* streamlining the issuance programme by making greater use of re-opening of existing Exchange Fund Notes issues; and,

* introducing an electronic trading platform for Exchange Fund Bills and Notes.

Phased introduction

The authority will implement the recommendations in phases over the next two years, allowing sufficient time for introducing changes to the existing systems.

As part of the review, the Currency Board Sub-Committee of the Exchange Fund Advisory Committee also reconsidered a request made by the authority to nine Multilateral Development Banks in September 1998 that they should confine their issuance of Hong Kong dollar denominated bonds to tenors of three years or longer to help maintain monetary stability in the face of the Asian financial crisis.