a funding source – was limited. nevertheless, securitisation of retail loans, both abs and rmbs reported a 61 per cent increase in volume in 2009 – 10. 16. while the securitisation market has remained concentrated with a handful of originators and limited investors, the asset classes have continued to diversify, the latest additions being gold loans, microfinance loan receivables and loan against property. trends in structured finance volumes ( rs. billion ) type 2001 – 02 2002 – 03 2003 – 04 2004 – 05 2005 – 06 2006 – 07 2007 – 08 2008 – 09 2009 – 10 abs 12. 9 36. 4 80. 9 222. 9 178. 5 234. 2 313. 2 135. 8 209. 7 mbs 0. 8 14. 8 29. 6 33. 4 50. 1 16. 1 5. 9 32. 9 62. 5 cdo / lso / slsd 19. 1 24. 3 28. 3 25. 8 21. 0 119. 0 318. 2 364. 4 145. 8 others 2. 3 0. 5 – – 11. 6 7. 9 total 36. 8 77. 8 139. 3 308. 1 249. 6 369. 3 650. 3 544. 7 425. 9 ( cdo : corporate debt obligations, lso : loan sell off, slso : single loan sell - down ) source : various rating agencies like icra, crisil etc. rbi guidelines 17. rbi had issued comprehensive guidelines on securitization in february 2006 based on international best practices. the main focus of the guidelines was to encourage securitization in manner that ensures true sale - real risk transfer and banks do not retain risks in the transferred assets beyond a point. to this end, limit was placed on banks ’ exposure to ptcs and concentration of entire credit enhancement in the originating bank was discouraged by making second loss facilities more costly through higher capital adequacy. banks are however permitted to invest outside the prescribed limit for non - listed investments in abs and mbs which are rated at or above the minimum investment grade. 18. another feature of the 2006 guidelines was the requirement that the gain on securitization of assets should not be recognized upfront and should be amortised over the life of the securities issued. this requirement was put as a conservative measure to avoid securitisation being used to inflate profits even while banks exposures in

aml / cft systems. to broaden our exposure, we assigned representatives to act as apg experts to perform similar evaluation on other apg members. through participating in aml related activities, we have established good communication and close working relationship with the related international bodies and their members. apart from reinforcing financial supervision, the amcm also dedicated efforts to foster financial development. all along, we have been maintaining good communication and close working relationship with the participants, who have shared with us many opinions in relation to business development and supervision. our collaborative effort helps to facilitate the stable and healthy development of the macao financial market. internationally, we have been maintaining communication with relevant overseas supervisory authorities in sharing constructive ideas relating to the introduction of cross - border financial business, cooperation on cross - border supervision and the establishment of cross - border financial facilities. apart from regular bilateral meetings, we executed a “ financial cooperation arrangement ” with the shenzhen central sub - branch of the people ’ s bank of china and a “ letter of intent for the cooperation in the development of payment and settlement system ” with the shenzhen financial electronic settlement centre in 2006. besides, we were entrusted with the mission to organize a msar government delegation and an entrepreneur delegation to participate in the “ pan - pearl river delta region financial services forum ” held in hong kong. we joined force with the macau insurers ’ association, the macau insurance agents and brokers association and the federation of macau professional insurance intermediaries to organize the third insurance exhibition. furthermore, we jointly organized the “ mainland, hong kong and macao onsite / offsite inspection seminar ” in yunnan with the state administration and foreign exchange and the hong kong monetary authority. we are confident that the economic growth of macao will sustain and the business of the financial sector will continue to flourish. however, the international economic and financial ecology is undergoing some changes. macao is receiving more and more attention internationally. the financial sector is expected to encounter more challenges after the flying colours achieved in past few years. challenges do not necessarily arise from the limitation of business development. they may also come from the continued requirement in risk management enhancement or even external factors beyond our control. despite the tremendous challenges ahead, we believe that all financial institutions have already mapped out strategies to enhance risk management, swiftly adapt to changing market environment, provide more financial products and services that would be conducive to the development of the local economy and society, facilitate the sophistication and stable