Financial ServiceFinancial Service

1.1.Definition under the Definition under the Services Sectoral Services Sectoral Classification ListClassification ListW/120, Section 7W/120, Section 7

A. All insurance and insurance-related servicesA. All insurance and insurance-related services a.Life, accident and health insurance servicesa.Life, accident and health insurance services b.Non-life insurance servicesb.Non-life insurance services c.Reinsurance and retrocessionc.Reinsurance and retrocession d.Services auxiliary to insurance (including broking and agency d.Services auxiliary to insurance (including broking and agency

services)services) B.Banking and other financial services (excl. insurance)B.Banking and other financial services (excl. insurance)

a.Acceptance of deposits and other repayable funds from the a.Acceptance of deposits and other repayable funds from the publicpublic

b.Lending of all types, incl., inter alia, consumer credit, mortgage b.Lending of all types, incl., inter alia, consumer credit, mortgage credit, factoring and financing of commercial transactioncredit, factoring and financing of commercial transaction

c.Financial leasingc.Financial leasing d.All payment and money transmission servicesd.All payment and money transmission services

e.Guarantees and commitmentse.Guarantees and commitments f.Trading for own account or for account of customers, f.Trading for own account or for account of customers,

whetheron an exchange, in an over-the-counter market or whetheron an exchange, in an over-the-counter market or otherwise, the following:otherwise, the following:

- money market instruments (cheques, bills, certificate of - money market instruments (cheques, bills, certificate of deposits, etc.)deposits, etc.)- foreign exchange- foreign exchange- derivative products incl., but not limited to, futures and options- derivative products incl., but not limited to, futures and options- exchange rate and interest rate instruments, inclu. products - exchange rate and interest rate instruments, inclu. products such as swaps, forward rate agreements, etc.such as swaps, forward rate agreements, etc.- transferable securities- transferable securities- other negotiable instruments and financial assets, incl. bullion- other negotiable instruments and financial assets, incl. bullion

g.Participation in issues of all kinds of securities, incl. under-g.Participation in issues of all kinds of securities, incl. under-writing and placement as agent (whether publicly or privately) writing and placement as agent (whether publicly or privately) and provision of service related to such issuesand provision of service related to such issues

h. Money brokingh. Money broking i. Asset management, such as cash or portfolio management, all i. Asset management, such as cash or portfolio management, all

forms of collective investment management, pension fund forms of collective investment management, pension fund management, custodial depository and trust servicesmanagement, custodial depository and trust services

j. Settlement and clearing services for financial assets, incl. j. Settlement and clearing services for financial assets, incl. securities, derivative products, and other negotiable instrumentssecurities, derivative products, and other negotiable instruments

k. Advisory and other auxiliary financial services on all the k. Advisory and other auxiliary financial services on all the activities listed in Article 1B of MTN.TNC/W/50, incl. credit activities listed in Article 1B of MTN.TNC/W/50, incl. credit reference and analysis, investment and portfolio research and reference and analysis, investment and portfolio research and advice, advice on acquisitions and on corporate restructuring advice, advice on acquisitions and on corporate restructuring and strategyand strategy

l. Provision and transfer of financial information, and financial l. Provision and transfer of financial information, and financial data processing and related software by providers of other data processing and related software by providers of other financial servicesfinancial services

C. OtherC. Other

2. Why should financial 2. Why should financial services be important for services be important for

electronic commerce?electronic commerce?

Technological advances have had major impacts Technological advances have had major impacts on the financial services industry and effect a on the financial services industry and effect a whole new range of competitors to financial whole new range of competitors to financial

services markets.services markets.Most of the world ‘s major securities and Most of the world ‘s major securities and derivatives exchanges provide electronic derivatives exchanges provide electronic

transactions are also done electronically, for transactions are also done electronically, for example, the world’s major banks yet provide on-example, the world’s major banks yet provide on-

line banking services and it will replace agents line banking services and it will replace agents and telephone services because electronic and telephone services because electronic

commerce is much easier and less costly through commerce is much easier and less costly through the Internet.the Internet.

•3. What is the main function 3. What is the main function of the Annex on Financial of the Annex on Financial Services?Services?

For the purposes of this Annex:For the purposes of this Annex:(a) A financial service is any service of a financial nature (a) A financial service is any service of a financial nature

offered by a financial service supplier of a Member. offered by a financial service supplier of a Member. Financial services include all insurance and insurance-Financial services include all insurance and insurance-related services, and all banking and other financial related services, and all banking and other financial services (excluding insurance) . Financial services include services (excluding insurance) . Financial services include the following activities:the following activities:Insurance and insurance-related servicesInsurance and insurance-related services

• (i) Direct insurance (including co-insurance) : (i) Direct insurance (including co-insurance) : • (A) life (A) life • (B) non-life (B) non-life • (ii) Reinsurance and retrocession; (ii) Reinsurance and retrocession; • (iii) Insurance intermediation, such as brokerage and (iii) Insurance intermediation, such as brokerage and

agency; agency; • (iv) Services auxiliary to insurance, such as consultancy, (iv) Services auxiliary to insurance, such as consultancy,

actuarial, risk assessment and claim settlement services. actuarial, risk assessment and claim settlement services.

Banking and other financial services (excluding Banking and other financial services (excluding insurance)insurance)

• (v) Acceptance of deposits and other repayable funds from the (v) Acceptance of deposits and other repayable funds from the public; public;

• (vi) Lending of all types, including consumer credit, mortgage (vi) Lending of all types, including consumer credit, mortgage credit, factoring and financing of commercial transaction; credit, factoring and financing of commercial transaction;

• (vii) Financial leasing; (vii) Financial leasing; • (viii) All payment and money transmission services, including (viii) All payment and money transmission services, including

credit, charge and debit cards, travellers cheques and credit, charge and debit cards, travellers cheques and bankers drafts; bankers drafts;

• (ix) Guarantees and commitments; (x) Trading for own (ix) Guarantees and commitments; (x) Trading for own account or for account of customers, whether on an exchange, account or for account of customers, whether on an exchange, in an over-the-counter market or otherwise, the following: in an over-the-counter market or otherwise, the following:

• (A) money market instruments (including cheques, bills, (A) money market instruments (including cheques, bills, certificates of deposits) ; certificates of deposits) ;

• (B) foreign exchange; (B) foreign exchange;

• (C) derivative products including, but not limited to, futures and (C) derivative products including, but not limited to, futures and options; options;

• (D) exchange rate and interest rate instruments, including (D) exchange rate and interest rate instruments, including products such as swaps, forward rate agreements; products such as swaps, forward rate agreements;

• (E) transferable securities; (E) transferable securities; • (F) other negotiable instruments and financial assets, including (F) other negotiable instruments and financial assets, including

bullion. bullion. • (xi) Participation in issues of all kinds of securities, including (xi) Participation in issues of all kinds of securities, including

underwriting and placement as agent (whether publicly or underwriting and placement as agent (whether publicly or privately) and provision of services related to such issues; privately) and provision of services related to such issues;

• (xii) Money broking; (xii) Money broking; • (xiii) Asset management, such as cash or portfolio management, (xiii) Asset management, such as cash or portfolio management,

all forms of collective investment management, pension fund all forms of collective investment management, pension fund management, custodial, depository and trust services; (xiv) management, custodial, depository and trust services; (xiv) Settlement and clearing services for financial assets, including Settlement and clearing services for financial assets, including securities, derivative products, and other negotiable securities, derivative products, and other negotiable instruments; instruments;

• (xv) Provision and transfer of financial information, and financial data (xv) Provision and transfer of financial information, and financial data processing and related software by suppliers of other financial processing and related software by suppliers of other financial services; services;

• (xvi) Advisory, intermediation and other auxiliary financial services on (xvi) Advisory, intermediation and other auxiliary financial services on all the activities listed in subparagraphs (v) through (xv) , including all the activities listed in subparagraphs (v) through (xv) , including credit reference and analysis, investment and portfolio research and credit reference and analysis, investment and portfolio research and advice, advice on acquisitions and on corporate restructuring and advice, advice on acquisitions and on corporate restructuring and strategy. strategy.

(b) A financial service supplier means any natural or juridical person of a (b) A financial service supplier means any natural or juridical person of a Member wishing to supply or supplying financial services but the Member wishing to supply or supplying financial services but the term "financial service supplier" does not include a public entity. term "financial service supplier" does not include a public entity.

(c) “Public entity” means:(c) “Public entity” means:• (i) a government, a central bank or a monetary authority, of a (i) a government, a central bank or a monetary authority, of a

Member, or an entity owned or controlled by a Member, that is Member, or an entity owned or controlled by a Member, that is principally engaged in carrying out governmental functions or principally engaged in carrying out governmental functions or activities for governmental purposes, not including an entity activities for governmental purposes, not including an entity principally engaged in supplying financial services on commercial principally engaged in supplying financial services on commercial terms; or terms; or

• (ii) a private entity, performing functions normally performed by a (ii) a private entity, performing functions normally performed by a central bank or monetary authority, when exercising those fucentral bank or monetary authority, when exercising those fu

4. What are the four types of 4. What are the four types of government intervention or government intervention or involvement that could have an involvement that could have an impact on the financial services impact on the financial services sector?sector?

In chapter II of WTO (1997)In chapter II of WTO (1997)

1.1. Macroeconomic policy management;Macroeconomic policy management;

2.2. Prudential regulations;Prudential regulations;

3.3. Non-prudential regulation to pursue Non-prudential regulation to pursue various public policy objectives other than various public policy objectives other than that falling under 4 andthat falling under 4 and

4.4. Trade restrictions concerning market Trade restrictions concerning market access or national treatment.access or national treatment.

5. What are the most common 5. What are the most common market access and national market access and national treatment limitations imposed by treatment limitations imposed by WTO members on commitments WTO members on commitments in financial services? Would in financial services? Would these limitations have the same these limitations have the same effect on financial services effect on financial services delivers on-line?delivers on-line?

Licensing and authorization Licensing and authorization requirements in financial services are requirements in financial services are the most common market access and the most common market access and national treatment.national treatment.

Licensing and authorization Licensing and authorization requirement are not included in on-requirement are not included in on-line transactions.line transactions.