Hong Kong

Clearing Agents
Hong Kong Securities Clearing Company Limited (HKSCC) clears eligible securities through the Central Clearing and Settlement System (CCASS), including ordinary shares, preference shares, registered warrants, debt securities, exchange fund notes and provisional allotment letters relating to nil paid rights, exchange traded funds, unit trust, funds and foreign securities traded on the SEHK. The Central Money markets Unit (CMU) Service operated by the Hong Kong Monetary Authority (HKMA) acts as clearing agent for fixed/floating rate certificates of deposit, commercial papers, corporate bonds and notes, exchange fund bills and notes, and other money market and capital market bearer instruments as specified by HKMA. The HKMA operates a HKD, USD and EUR clearing system that allows real time and end-of-day delivery versus payment settlement of HKD, USD or EUR debt securities deposited in the CMU.

Depositories:

The Hong Kong Monetary Authority (HKMA) established the Central Money markets Unit (CMU) in 1990 to provide computerized clearing and settlement facilities for Exchange Fund Bills and Notes. Since then, the service has been extended to include other HKD and non-HKD debt securities.

Central Clearing and Settlement System (CCASS) – is a computerized book-entry clearing and settlement system for transactions in securities listed on Hkex.

Eligible debt securities are immobilized or dematerialized in the Central Money Markets Unit (CMU) and CCASS.

Payment Systems:

The sub custodian’s payment system can process clients’ payment instructions on a STP basis. When a client sends a payment instruction via SWIFT MT202 or MT103, as long as the instruction format fits the sub custodians STP requirement and the account has sufficient funds, the payment will be effectively automatically to the receiving bank without any manual intervention. For payment to a local bank, it is normally completed through the Clearing House Automatic Transfer System (CHATS). Telegraphic transfer is used for payment to an overseas bank.

Manual repair is needed when the instruction has not quoted the correct information e.g. the BIC is incorrectly quoted or the beneficiary information is missing, or other incomplete information. If the account has insufficient funds to cover the payment, the payment will be put on hold in the authorization queue until the account is funded or it is approved by the relevant Relationship Manager.

Similarly, for inward payment, as long as the remitting bank sends the payment order, either via local RTGS or SWIFT, in the correct STP requirement format, and the cover fund has been received, the payment will be directly credited into the client’s account. The sub custodian will clarify with the client if any information is absent or not clear and the payment will be kicked back if the client does not recognize it.

Overdraft Permitted: Yes investors can go overdrawn in their current cash accounts