Financial and Monetary Affairs | 71
The US dollar RTGS system and euro RTGS system have also been operating since 2000 and 2003 respectively, allowing real-time settlement of transactions in these currencies, thereby reducing or eliminating settlement risk caused by any time gap. Thanks to the interface between the three RTGS systems, Hong Kong dollar/US dollar/euro foreign exchange transactions can be settled on a payment-versus- payment (PvP) basis.
The Central Money Markets Unit (CMU) Service, established in 1990, is operated by the HKMA to provide a clearing and custodian system for EFBNs and other private debt securities. The CMU system accepts both Hong Kong dollar and foreign currency denominated debt instruments. It has been fully integrated with interbank payment systems, and is linked up with international central securities depositories like. Euroclear and Clearstream to enable overseas investors to trade CMU securities. It also has established links with the regional central securities depositories in Mainland China, Australia, New Zealand and the Republic of Korea.
Through its integration with the three RTGS systems in Hong Kong, the CMU enables members to settle Hong Kong dollar, US dollar and euro securities on a delivery-versus-payment (DvP) basis, thereby enhancing settlement efficiency and eliminating settlement risk. The interface also enables automatic intraday repurchase agreements to provide intraday liquidity to participants in the RTGS systems.
The Clearing and Settlement Systems Ordinance, which became effective in November 2004, empowers the Monetary Authority to designate and oversee clearing and settlement systems that are material to the monetary or financial stability of Hong Kong or to the functioning of Hong Kong as an international financial centre. Five clearing and settlement systems, including the CMU and Hong Kong dollar Clearing House Automated Transfer System (CHATS), Continuous Linked Settlement System, US dollar CHATS and euro CHATS, have been designated. Each system was issued a certificate of finality, which provides statutory backing to the finality of settlement for transactions made through the system. The HKMA found all designated systems to be continuously in compliance with the ordinance.
Hong Kong Monetary Authority
The HKMA was established in April 1993
1993 under the Exchange Fund (Amendment) Ordinance 1992.
Its policy objectives are to maintain currency stability within the framework of the Linked Exchange Rate system through sound management of the Exchange Fund, monetary policy operations and other means deemed necessary; promote safety and stability of the banking system through the regulation of banking business, the business of taking deposits and the supervision of Als; and promote efficiency, integrity and development of the financial system, particularly payment and settlement arrangements.
The HKMA is an integral part of the Government, but can employ staff on terms that differ from those of the civil service to attract personnel of the appropriate experience and expertise. Its staff and operating costs are charged directly to the Exchange Fund instead of the general revenue. The HKMA is accountable to the
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