76 | Financial and Monetary Affairs
Enhancement of the Financial Infrastructure
Hong Kong has a robust real time gross settlement (RTGS) interbank payment system. All banks in Hong Kong maintain settlement accounts with the HKMA through the Hong Kong dollar RTGS. All RTGS payment transactions are settled in real time. The banks may obtain intra-day liquidity through intra-day repurchase agreements with the HKMA using the EFBNS as collateral.
US dollar, Euro and RMB RTGS systems also enable transactions in these currencies to be settled in real time, reducing or eliminating settlement risk. RTGS systems in Hong Kong are linked to enable foreign-exchange transactions to be settled on a payment-versus-payment (PvP) basis.
The HKMA operates a Central Moneymarkets Unit (CMU) to provide clearing and custodian services for EFBNs and other Hong Kong dollar or foreign-currency private debt securities. It is linked to a number of international and regional central securities depositories to enable overseas investors to trade CMU securities. In November 2010, the Central People's Government's Ministry of Finance and the HKMA signed a memorandum of co-operation on using the CMU for issuance of RMB sovereign bonds.
Through its integration with the RTGS, the CMU enables securities to be settled on a delivery-versus-payment basis, enhancing settlement efficiency and eliminating settlement risk. The interface also enables users of RTGS to access intra-day liquidity through automatic intra-day repurchase agreements.
Major projects completed in 2010 included:
• Completion of SWIFTNet migration5;
• Enhancement of the RMB RTGS system to support money settlement for the potential listing and trading of renminbi-denominated securities on the HKEX and to facilitate cross-border multi-currency payments using Hong Kong's RTGS systems;
• Launch of a PvP link between Hong Kong's US dollar RTGS system and Indonesia's local currency RTGS systems; and
• Launch of a project for developing a local trade repository for over-the- counter derivatives transactions.
Developing a Scripless Securities Market
A working group comprising representatives of the SFC, HKEX and the Federation of Share Registrars Limited, issued a set of joint consultation conclusions in September 2010 announcing plans to implement a scripless securities market in Hong Kong. The scripless regime will be implemented in phases to provide investors with the flexibility of holding securities in physical certificates or in paperless form. The new paperless option will enable investors to hold securities in their own names
5
It replaces the closed, proprietary platform of Hong Kong's RTGS systems and the CMU with an open platform using Internet technology.
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