The Hong Kong Monetary Authority (HKMA) announced Friday that it has appointed the Bank ofEast Asia, DBS Bank (Hong Kong) and Wing Lung Bank as retail Exchange Fund notes distributors under a pilot scheme to facilitate retail access to Exchange Fund Notes.

Scheduled to launch on Aug. 1 2003, the scheme allows retail investors to subscribe to the notes in the primary market without specifying the bid price. Successful non-competitive tenders will be awarded at the average accepted price in the competitive tender.

The first tranche of notes (a two-year issue) on offer for non-competitive tender is scheduled to be issued on Aug. 13. Investorscan apply for the notes from Aug. 1 to Aug. 8 through the distributors.

The scheme also facilitates participation by retail investors in the secondary market for the notes by unifying trading practices and increasing the transparency of the pricing and fee structure.

The distributors undertake to adopt a set of unified trading practices in the distribution of the notes to retail investors in the secondary market to enhance pricing transparency and facilitate comparison.

The scheme will be reviewed after one year so that its coveragecan be adjusted to take account of the interest of the retail investors.

The Exchange Fund Note Program was introduced in May 1993. The Notes are Hong Kong dollar fixed income debt securities issued by the HKMA and constitute direct, unsecured, unconditional and general obligations of the Hong Kong Special Administrative RegionGovernment for the account of the Exchange Fund, which was established under the Exchange Fund Ordinance.

The minimum denomination of the Notes is 50,000 Hong Kong dollars and can be subscribed in integral multiples thereof. The Notes are exempt from profits tax and stamp duty. Since August 1999 the Notes have been listed on the Stock Exchange of Hong Kong.

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