Their other features are: low administrative and marketing cost, and labor wages, simple routine procedures, highly efficient communications and readily available information needed for work therein, the usage of uncomplicated production and operation methods, the ability to cope with new changes with regard to meeting consumers’ preferences and tastes, the ability to change the composition of labor force, production, marketing or finance polices to face quick changes without any hesitation, helping them to overcome economic cycles and changes. In addition, SMEs are also characterized by the freedom to enter and exit the market because of the modest ratio of their liabilities to fixed or full assets, and the easiness to convert small enterprises into liquidity in a short time without incurring a significant loss. Furthermore, the exit of a SME will have no significant impact on the market. Finally, SMEs are flexible to move and spread geographically. In spite of these features, the growth of SMEs is facing a variety of challenges which may be similar to a great extent not only at the level of one country only, but also at the global level.
At the end of the day it's probably fair to say that, although we may experience some difficulty in describing exactly what a derivative is, we can usually recognise one when we encounter it. The interests of the central bank in derivatives will tend to be rather broader than those of any commercial bank, trader or broker, because of its multiple policy responsibilities. The issues can be conveniently grouped under four headings: infrastructure, supervision, information, and operations. Infrastructure HKMA is probably fairly typical of most central banks in developed financial centres in having a general concern for the stability and development of the financial infrastructure, but without necessarily being involved directly in the provision of that infrastructure, of which derivatives nowadays form an indispensable part. Derivatives have brought substantial benefits to the commercial community, in facilitating hedging and hence business planning more generally, and have enabled the financial institutions to offer a progressively wider range of services and greater efficiency in the intermediation process, as well as to exploit market imperfections and other trading opportunities for their own gain. The range of available derivative products in Hong Kong is extensive. Exchange tradable derivatives include futures and options on the Hang Seng Index as well as on individual Hong Kong stocks and, since the launch a few weeks ago, on a selection of leading stocks of certain overseas exchanges. Exchange traded interest rate products include one-month and three-month HIBOR futures; and futures contracts on three-year Exchange Fund Notes are expected to commence trading later this month.