HKEx is the holding company of The Stock Exchange of Hong Kong Limited, Hong Kong Futures Exchange Limited and Hong Kong Securities Clearing Company Limited. It brings together the market organizations which have transformed Hong Kong's financial services industry from a domestically focused industry to the global player it is today.

HKEx went public in June 2000 following the integration of the securities and futures market. As a listed company, answerable to its shareholders, HKEx competes vigorously for opportunities in the region and around the world. HKEx is having an effective commercial business structure, geared to achieving growth and continuing success. Its operations are organized into focused and commercially driven business units, directly supervised and controlled by HKEx's management and board. The board, HKEx's highest decision-making body, shapes policies for major strategic and operational matters.

HKEx provides a comprehensive range of pre- and post-trade investment services. Business units comprising the Exchange Division, Clearing Division, Business Development Division, Information

Services Department and Information Technology Division are geared towards providing services which add value for investors, market intermediaries and listed companies.

The Hong Kong Stock Exchange Building

Securities market
Reports of securities trading in Hong Kong date back to the mid-19th century. However, the first formal market, the Association of Stockbrokers in Hong Kong, was not established until 1891. The Association was re-named the Hong Kong Stock Exchange in 1914.

A second exchange, the Hong Kong Stockbrokers' Association was incorporated in 1921. The two exchanges merged to form the Hong Kong Stock Exchange in 1947 and re-establish the stock market after the Second World War.

Rapid growth of the Hong Kong economy led to the establishment of three other exchanges - the Far East Exchange in 1969; the Kam Ngan Stock Exchange in 1971; and the Kowloon Stock Exchange in 1972.

Pressure to strengthen market regulation and to unify the four exchanges led to the incorporation of the Stock Exchange of Hong Kong Limited in 1980. The four exchanges ceased business on 27 March 1986 and the new exchange commenced trading through a computer-assisted system on 2 April 1986. Prior to the completion of the exchange merger in March 2000, the unified stock exchange had 570 participant organizations.

Computers were integrated on April 2, 1986, which has helped modernize the system. In 1993, the exchange launched the "Automatic Order Matching and Execution System" (AMS) that was replaced by the third generation system (AMS/3) in October, 2000. Systems as such were added to meet the increased popularity of online Stock trading.

The Derivatives market
Established in 1976, Hong Kong Futures Exchange Limited is a derivatives leader in the Asia-Pacific region. It provides efficient and diversified markets for trading futures and options contracts by its more than 130 participant organizations, including many that are affiliated to international financial institutions.

Derivatives market under HKEx operates futures and options markets on a broad range of products, including equity index, stock and interest rate. HKEx and its subsidiaries, HKFE Clearing Corporation Limited and HKEX Options Clearing House Limited, operate rigorous risk management system which enables participants and their clients to meet their investment and hedging needs in a liquid and well-regulated market place.

Stock settlement and clearing
Hong Kong Securities Clearing Company Limited was incorporated in 1989. It created CCASS, the central clearing and settlement system, which started operating in 1992 and became the central counterparty for all CCASS participants.

The clearing operation is based on the immobilization of share certificates in a central depository. Share settlement is on a continuous net settlement basis by electronic book entry to participants' stock accounts in CCASS. Transactions between CCASS participants are settled on T+2, the second trading day following the transaction.

The Reform
In his 1999 Budget Speech, Hong Kong's Financial Secretary announced comprehensive market reform of the stock and futures markets. The reforms were designed to increase competitiveness and meet the challenges of an increasingly globalised market.

Under the reform, the Stock Exchange of Hong Kong Limited, Hong Kong Futures Exchange Limited demutualised and together with Hong Kong Securities Clearing Company Limited, merged under a single holding company, HKEx.

The merger was completed on 6 March 2000 and HKEx listed its shares by introduction on the stock exchange on 27 June 2000.