issues like libor and local alternative reference rates transition, and helped our regional peers push forward with their preparation for the transition. i ’ m glad to see that the w gfm has been a useful platform that complements the bilateral discussion of member jurisdictions with isda, and facilitates certain members ’ participation in the 2nd isda ibor fallback protocol. i understand that isda is planning to publish the 2nd protocol by the end of this year. joint industry efforts to support the transition 6. besides policy guidance and regulatory push, active participation by industry is also key in ensuring a smooth libor transition. over the past decades, libor has been so widely used and deeply ingrained in our global economy that the pricing and return of a broad range 1 / 4 bis central bankers'speeches of financial products were referencing to this critical benchmark. to help us tackle this complex exercise and further expedite our transition progress, collaborative efforts would be key. this means that – not only banks, sell - side and buy - side institutions should continue to push forward with their preparatory work, but also their corporate and sme clients should step up the transition efforts. 7. to facilitate a smooth transition, tremendous efforts have been put in by various industry associations in the past few years. alongside their close engagement with industry stakeholders, they have developed useful resources and materials to promote greater awareness and readiness. in this respect, we strongly encourage market participants to draw reference from these industry publication, and make good use of the existing tools available when preparing for the transition. 8. with that, i would like to highlight and draw your attention to a joint information note published by the asia pacific loan market association ( aplma ) and treasury markets association ( tma ) last month, which sets out the key options available in the loan market for replacing us dollar libor. we hope that, with this publication, loan borrowers and market participants could develop a better understanding on the characteristics of these options, and make timely action to transition away from libor. 9. the hkma has also been very focused on raising the market ’ s awareness of libor transition. we have spoken in different conferences on this topic, and also encouraged industry bodies, such as tma, to organise seminars to explain the background and implication of libor transition. all of the efforts, by us or by the industry, have a common goal – that is to reach out to a wide range of audience for their attention and get ready for this

the worst. and if liquidation were needed, a stand - alone subsidiary model would have important advantages over a branch model, especially if there is substantial deposit taking activity at the local level. i am not saying that the liquidation of a global bank organized through subsidiaries would be an easy task. what i mean is that it would be much easier than for global banks which are deeply interconnected across countries through branches. bis central bankers ’ speeches the stand - alone subsidiaries model has an additional advantage, from the perspective of the supervisor. it is far more symmetric for the local supervisor than the alternative model, allowing them to really supervise the institution. and as a home supervisor, if a foreign bank has a significant share of a domestic market, i would rather have the domestic supervisor deeply involved in the monitoring of that bank. our experience has taught us that local supervisors usually have a deeper knowledge and more accurate information on developments in their home banking sectors than distant parent company supervisors. the expansion of global banks through subsidiaries provides for this deep involvement of the local supervisor. this may be a more effective – and therefore safer – arrangement, as it provides for a double layer of supervision, by both home and local supervisors. moreover, from the group ’ s perspective, the combination of decentralized management and strong controls at the parent company creates as well a double layer of control within the group. this can have a drawback in terms of higher costs but some international active banks have demonstrated that it can be compatible with a good efficiency ratio. the subsidiaries model is one way of approaching this issue, but i am very conscious that it is not the only one. nor is it suitable for all banks. it depends on many factors, including the type of business conducted by the institution – retail, investment banking etc. so let me be clear that i am not prescribing this model, and that i do not think it is the answer in all circumstances. but it is a factor that makes certain international groups less dangerous for the rest of the system in terms of their likely impact in case of difficulties. in other cases, the institutions concerned may also be able to argue that they have other controls, or business models, in place which reduce their risks. the validity of all reasonable approaches should be explored. in this context, let me mention here the work underway in the fsb and bcbs to deal with the global sifis issue. in my opinion, this work is going in the right direction. for example, we