, administrator, custodian and investment manager – are generally provided by other companies which may be related to the bank. what this means is that the mpf brings together a number of different companies and, along with these companies, their various regulators : the mandatory provident fund schemes authority, the securities and futures commission, the insurance authority and the hkma. the involvement of four regulators creates an obvious need for clarity on their respective roles and coordination of these roles. the mpfa is clearly in the driving seat as the lead regulator. it has the responsibility to administer the mpf ordinance and to ensure compliance with the legislation. it approves and regulates the trustees who have the central role in ensuring that schemes are properly managed. the mpfa has also produced a code of conduct for mpf intermediaries. however, the day - to - day supervision of such intermediaries rests with the sfc, insurance authority and hkma depending on which of us is the main regulator of the intermediary in question. the sfc also has a role to play in authorising mpf funds and in the licensing and supervision of investment managers and advisers. this may seem complicated, but it seems to work. the arrangements have been cemented by a memorandum of understanding among the various parties and through the establishment of a mpf intermediaries regulation coordinating committee that comprises representatives of the four regulators and the financial services bureau. at a higher level, all the various parties are represented on the council of financial regulators, which is chaired by the financial secretary and whose remit is to address cross - sectoral regulatory issues. similar issues of division of responsibility and coordination arise in relation to the issue of supervision of banks'securities business. as you know, this is a somewhat controversial issue because of the exemption that banks and other authorised institutions enjoy from much of the current securities legislation. although this exempt status is retained in the new securities and futures bill currently going through legco, the scope of the exemption will be drastically reduced and the banks will in fact be exempt in name only under the new legislation. in future, in respect of their securities business, banks will be subject to most of the same legislation, rules and standards of conduct that will apply to the brokers. these rules and standards will be set by the sfc, in consultation where necessary with the hkma. the hkma will act as the front - line regulator of the banks'securities business on a day - to - day basis. that

to conclude whether deregulation has resulted in any significant redistribution of deposits among banks. so we cannot tell how interest elastic the demand for savings accounts may prove to be, particularly in today's somewhat artificial conditions of high liquidity. however, what can be said is that deregulation does offer the smaller banks an enhanced ability to compete for savings accounts and for those customers which the large banks may be less eager to retain. while the smaller banks may have to pay a higher rate for their savings deposits, they will still benefit if they can substitute such funds for even higher cost, and less stable, time deposits. consumers will also benefit from deregulation through greater choice of savings products and, for those with larger balances at least, from higher interest rates. however, we have to face the fact that not all depositors will be better off in the deregulated world. the harsh laws of economics mean that those with smaller balances may suffer disproportionately from new fees and charges and receive less compensation in the form of higher interest. competition will help to address this concern to some extent since banks have adopted different charging and interest rate policies. customers should therefore be prepared to shop around for the best offer. diversity of approach among banks should also help to mitigate the risk that an increasing proportion of the population will be excluded from the banking system by prohibitive costs. but this is something that both the government and the banks will need to keep an eye on as the effects of deregulation work their way through. the mandatory provident fund the mandatory provident fund is another innovation that is bringing new challenges and opportunities for the banks and their related companies. the opportunities come from the chance to earn a stream of annuity - type revenue stretching out into the distant future. the assets under management in mpf funds are already building up faster than expected and amounted to about hk $ 22 billion at the end of may. this includes assets transferred from orso schemes. the combination of regular contributions and long - term investment returns means that mpf assets may total several hundred billion dollars in ten years time. this will earn the mpf participants an annual all - in fee of around 1. 75 % of the assets, though this will have to be shared among the various service providers. the challenges come from the cost and effort of putting in place the necessary systems and personnel to handle what is a complex business and which carries a high degree of reputation risk if something goes wrong.