the financial revolution which i am attempting to describe - i mean the era of sophisticated asset and liability management techniques, of ever more exotic derivative and hedging products, and so on. but i guess it got going during the 1970s. why not before? it seems that for most of the preceding postwar years banking and finance enjoyed a rather cosy and protected existence around the world. capital controls and domestic regulation tended to constrain the scope for competition or diversification ; many domestic banking sectors were cartelised to a significant degree, or in some cases state controlled ; cross - border migration was, for one reason or another, rather rare. all in all, the incentive and scope to innovate were weak by today ’ s standards. the environment changed quite quickly when national administrations began to deregulate their financial sectors at the micro level and to free up movements of capital at the macro level. just as importantly, the electronic data processing revolution began to open up avenues for financial engineering that could never have been dreamt of before. in the dealing rooms of london - then as now the world ’ s leading international financial centre - professional mathematicians moved in alongside, or even displaced, the “ barrow boys ”. perhaps i should explain that the barrow boy stereotype was a cockney young man from the east end of london with probably no very accomplished formal education but with strong mental arithmetic and trading skills, acquired from working on market stalls. such people were until then regarded by many as possessing the best qualifications to become dealers or floor traders in the city of london. the it revolution has not of course been a static one. since the introduction of the first computers into financial product development and trading, computing power has grown exponentially. new vistas and previously unimaginable complexities for trading strategies have thus continually opened up ; and the ever - increasing speed of processing and communication has progressively rewritten the definition of “ time critical ”. the stream of innovation requires us not only to master the mathematics but also to assimilate a whole new vocabulary of jargon - designed, no doubt, to make the underlying mathematics more easily digestible. for example, i received a document from a leading international bank the other day explaining to me that the butterfly involved three tenors where the middle was the bullet and the wing was the barbell ; moreover i could long a two - five - ten by being long the two and the ten, each for a pv01 of half the sum for which i should short

, which should rank among the highest in the world. 6. we do spend a lot of our time monitoring risks and studying ways to manage them. but on the other hand, we are also acutely aware of the opportunities provided by the opening - up of mainland china ’ s financial sector, and we have been making efforts to enhance our role as a bridge between mainland china and the international markets. this is done mostly in collaboration with other financial centres and overseas authorities, including the banque de france. back in 2014, the hkma and banque de france signed a memorandum of understanding to strengthen cooperation between the two financial centres. to me, this collaboration can go beyond china opportunities to cover other new market developments, including fintech and green finance. 7. let me start with the opportunities in mainland china. as you are aware, last year marked the 40th anniversary of the reform and opening - up of mainland china. throughout these years, hong kong remains as the gateway to mainland china. today, as mainland china continues to open up its capital markets, we serve as a major platform for international investors to access the world ’ s second largest stock market and third largest bond market. take bond connect as an example. it provides a convenient channel for international investors to access the mainland ’ s bond market using international market practices such 1 / 2 bis central bankers'speeches as the nominee holding structure. similarly, stock connect provides access channel for international investors to invest in the mainland ’ s stock markets by engaging brokers and custodians in hong kong through existing structure. 8. with the smooth inclusion of a - shares into msci emerging markets index last year, more global indices are planning to add rmb products into their constituent assets. for example, rmb bonds will be included in the bloomberg - barclays global aggregate index starting this april and ftse ’ s global equity index series will also include a - shares from this june. the inclusion of rmb assets into global indices has driven up the demand for these assets and a good part of the investment is done through hong kong. at the same time, we are also working closely with the mainland to expand and enhance these connect schemes, including expanding the product scope to cover derivative products in the case of bond connect and etf in the case of stock connects. 9. talking about china opportunities, one key development is the guangdong - hong kongmacao bay area ( the greater bay area, or gba ). the gba combines mainland