Transcript Document

Service Expansion and Business Risk Control
Presentation for ACG17 Conference
Terek Mak, Vice President
Head of Cash Clearing Operations
(Global Clearing Division)
20 October 2013
Roles of Hong Kong Securities &
Clearing Company Limited (HKSCC)
Central
Counterparty
Central
Depository
Common
Nominee
• As a Central Counterparty (CCP) to clear and
settle trades executed on The Stock Exchange
of Hong Kong Limited (SEHK) and guarantee
settlement
• As a Central Securities Depository (CSD) to
provide shares deposit and withdrawal services
for settlement and/or custody purpose
• As a Common Nominee to provide corporate
action services to participants for their shares
held in CCASS (e.g. dividend distribution and
voting)
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Latest Service Expansion and
Business Risk Control Highlights
Settlement Finality on
Value Date
• Before: Stock settlement finalized on T+2 and money
settlement finalized on T+3 morning
• Now: Both stock and money settlement finalized on T+2
• Launched in July 2011
Multi-currencies
Settlement Instruction
• Enhanced Settlement Instruction function to accept DVP
money settlement in any CCASS eligible currencies (i.e.
HKD, USD or RMB)
• Launched in May 2012
Risk Management
Reform
• Introduced a new Margin, Margin Credit, and revised
Guarantee Fund model in November 2012
• Monitoring of settlement banks daily exposures to
strengthen the liquidity risk management (August 2013).
Scripless Securities
Market
• Target implementation in 2016
In Sync with
International Practice
• IOSCO
• FATCA
• EMIR
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Settlement Finality on Value Date
T+3 Finality - Before
By 9:00 pm on
T+2
HKSCC
Send money
settlement
instructions to
HKICL
Around 11:00
pm on T+2
HKICL
Payment details
available to
banks
By 9:30 am on
T+3
Designated
Banks
Report rejected
items to CCASS
and HKICL
Around 10:00
am on T+3
HKICL
Completion of
interbank bulk
settlement run
Around 10:30
am on T+3
HKSCC
Release shares
previously puton-hold
T+2 Finality – Now
At 4:20 pm on T+2
HKSCC
Send money
settlement instructions
to HKICL &
designated banks
At 4:35 pm on T+2
HKICL
Payment details
available to banks
By 5:20 pm on T+2
Designated Banks
Report rejected items
to CCASS
Around 6:00 pm on
T+2
HKICL
Completion of
interbank bulk
settlement run
Around 8:00 pm on
T+2
HKSCC
Release shares
previously put-on-hold
In compliance with IOSCO Principle: clear and final settlement by the end of the value date.
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Multi-currencies DVP Settlement
Before:
Settlement Instructions accept only the “Trading Currency” of the
Eligible Securities for DVP Settlement.
Settlement in “non-Trading Currency” only achieved in FOP
outside CCASS.
Now:
Enhanced Settlement Instruction function accepts DVP money
settlement in any of the CCASS eligible currencies (i.e. HKD, USD
or RMB) to facilitate market development.
Significantly reduced Counterparty and Settlement Risks between
CCASS Participants
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Risk Management Reform:
New Framework - Projected Loss Supported
by Financial Resources
• For all three clearing houses
• Funded solely by HKEx
• Third line of support
Rationale:
• Stability &
competitiveness
• Global trend
• IOSCO
compliance
Projected Loss
• Global Financial
crisis
Dynamic
GF/RF
(New)
Fixed
GF/RF
Margin
(New)
•
•
•
•
Dynamic vs. Static nature
Cover extreme but plausible
market price movement
Can be used for others’ default
Determined by market
activities
• First line of support
• Cover normal market price
movement
• Can only be used against CPs’
own default
• Directly associated with CPs’
own activities
Implemented in November 2012
Risk
Management
Capital
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Scripless Securities Market
Objectives
Market
Consultation
Dependencies
Tentative
Schedule
• Enhance overall efficiency and competitiveness in the
securities market as well as adopting international
practice
• Secure an appropriate and improved level of investor
choice and protection
• December 2009  Conducted market wide consultation
with market practitioners, participants, key market
operators, and regulators.
• September 2010  Issued Joint Consultation Conclusion
• Legislation changes:
i) Securities and Futures Ordinance (SFO),
ii) Companies Ordinance (CO) and;
iii) Stamp Duty Ordinance (SDO)
• Target market implementation 2016 (with phase approach)
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In Sync with International Practice &
Compliance
IOSCO
• Internal self assessment based on PFMI
completed in 2013
• FSAP assessment being conducted
FATCA
• Currently conducting internal review and impact
analyses
• Potential changes on systems and Clearing
Houses Rules
EMIR
• HKSCC applied for EMIR Recognition (3rd Country
CCP) in September 2013
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