LOCAL TREASURY BILLS (AMENDMENT) BILL

Order for Second Reading read.

The Minister for Finance (Dr Richard Hu Tsu Tau): Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

In order to activate the Government securities market, the MAS will be increasing the frequency and amount of Treasury Bills. This increase in the issue of Treasury Bills calls for a more efficient system of handling a large volume of transactions than the present system in which physical certificates are issued to purchasers of Treasury Bills. The Local Treasury Bills (Amendment) Bill 1987 seeks to allow a book-entry registration and clearing system to be used.

The advantages of such a book-entry system lie in reducing storage and handling costs and paper work; reducing the danger of loss, theft, destruction and counterfeiting; and permitting greater speed and efficiency in handling a large volume of transactions.

Instead of physical certificates having to travel back and forth at each transaction, with side-trips to the Monetary Authority for the registration of change in ownership, a computerized system for updating records in a central register maintained by the MAS will be substituted. Commercial banks and primary and registered Government securities dealers will each have two securities accounts with the MAS, one for their own holdings and the other for holdings on behalf of their customers. All transactions in Government securities will be reflected daily, in changes in these accounts. These institutions will, in turn, act as custodians of Government securities for their customers, rendering each an individual accounting of his holdings.

Sir, I beg to move.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Dr Richard Hu Tsu Tau].

Bill considered in Committee; reported without amendment; read a Third time and passed.