Good afternoon, ladies and gentlemen.

I am very pleased to be here today to sign the contract between HKEx and PCCW to consolidate the networks for the Exchange's main securities and derivatives market systems on the next generation SDNet.

HKEx operates four different networks for its main market systems.  There are separate networks for securities trading, securities clearing and settlement and the Market Data System for the securities market, and one network for the corresponding systems in the derivatives market.  Consolidating the four networks on a new platform is aimed at improving the operational efficiency of our Participants and offering other benefits to the market.

I am delighted to announce that HKEx has selected PCCW to supply, implement and operate the consolidated network. The selection was made from potential suppliers with the required capability and experience, following an open competition. A special team comprising members of HKEx's Internal Audit, Finance and Information Technology departments conducted a thorough tendering process and a stringent evaluation process.

To ensure the best technical solution was chosen and all technical requirements were met, the team evaluated the proposed technical solutions before examining the financial issues. During the technical evaluation, PCCW's proposed network solution passed all the required Proof of Concept tests set by HKEx. In addition, PCCW has committed to providing 99.99 per cent network availability and offering a prudent project implementation and integration approach to mitigate network risk.

Consolidating the network on a new platform using the latest Internet Protocol technology will help HKEx and its Participants reduce costs. Among all potential suppliers, PCCW offers the greatest savings in overall network expenses over five years, for both HKEx and the Participants. The monthly user fees for all AMS/3 trading devices were reduced by 20 per cent on 1 January this year, although the devices will be migrated to the consolidated network in 2007. Other users of the new network will enjoy savings upon migration. Further reductions will be considered after the network consolidation and a fee review are completed.

Other benefits of the project include high scalability, flexible bandwidth management, improved reliability and streamlined network management, all of which will support financial market growth and future development.

Flexible bandwidth management helps improve the performance of individual applications and maximises the overall use of the consolidated network. Improved reliability stems from the advanced technology in the HKEx Wide Area Network, and network management is being streamlined through consolidation of four networks into one.

Given the wealth of expertise and experience of PCCW, we believe it is an ideal choice to help HKEx build a consolidated network to meet future challenges.

The network consolidation project is part of HKEx's efforts to make the market infrastructure more robust in order to improve efficiency and market liquidity in a cost-effective manner. The project demonstrates HKEx's commitment to maintaining a high quality market infrastructure to ensure Hong Kong retains its position as a leading international financial centre.

Core network infrastructure construction has already started.  The HKATS, DCASS and the Price Reporting System will be migrated to the new network this year, followed by CCASS/3 next year, and AMS/3 and the Market Data System in 2007.

HKEx has kept the Securities and Futures Commission informed of the latest status of the project and will continue to do so through regular liaison meetings.

We will work closely with Participants to ensure a smooth rollout of the new network, and we look forward to the successful implementation of the next generation SDNet.