Creation Link Guide - Hong Kong

16.05.2018

Key features

CSD link as defined under CSDRa

Yes

Type of link

Indirect via Citibank N.A. (Hong Kong Branch) to :

  • Hong Kong Securities Clearing Company Ltd, operating CCASS
  • Hong Kong Monetary Authority, operating the CMU system

a. CSD Regulation (EU) No 909/2014 art. 2 (29)

 

CSD

Custodian

Name

Hong Kong Securities Clearing Company Ltd (HKSCC)  

Hong Kong Monetary Authority (HKMA)

Citibank, N.A. Hong Kong branch

FATCA GIIN

HKSCC: 7ENI1T.00000.LE.344

HKMA: not available

NXUTG8.00175.ME.344

LEI

HKSCC: 213800NM8ZN1F16ARD34

HKMA: not available

E57ODZWZ7FF32TWEFA76

Country of incorporation

Hong Kong

USA

Account type

Omnibus account

Omnibus account

Legal Account name / account holder

Account holder: Citibank NA Hong-Kong

HKSCC: securities are registered in the name of HKSCC Nominees Limited, the common nominee

HKMA: securities are in name of the CMU member (that is, Citibank NA Hong Kong)

Citibank NA Hong Kong branch as the participant in HKSCC and HKMA does not hold a segregated account for CBL at either CSD.

Clearstream Banking S.A.

Operational arrangements

Yes/NoRemarks
Settlement free of paymentYes  
Settlement against paymentYes 

Eligible settlement currencies:

  • CCASS: Hong Kong Dollar (HKD), Chinese Renminbi (RMB);
  • CMU: Hong Kong Dollar (HKD), Chinese Renminbi (RMB)
Settlement against payment in central bank money account of CBL/CBL customerNoCBL holds a cash account at the custodian. Against payment settlement in HKD and RMB is conducted in the HKMA payment system on the cash account of Citibank Hong Kong’s acting as the clearing party. 
Bridge settlementYes  
Shaping facilityNo 
Partial settlementNoNot market practice but is permissible with special arrangements.
Settlement penalty feesYesFailure of  stock delivery might potentially incur buy-in penalties.
Pre-matchingYes Occurs upon receipt of customers’ instructions and is subject to counterparty availability.
Back-to-back processingYes CCASS-eligible securities only.
AllegementsYes  
Automatic compensationNoAdjustment is performed based on information received from the depository.
Registered securitiesYes
  • For dematerialised securities, registration takes place automatically upon settlement.
  • For physical securities, manual intervention will be required and not automatically.
Multi Market SecuritiesYesPlease refer to the Multi-securities Guide.
Lending and borrowingYes For all CMU instruments eligible in CBL.
Proxy votingYes  
Investment FundsYes CCASS-eligible funds and ETFs.
Liquidity Hub ConnectNo 
Sale and purchase of rightsYes  
Repo servicesYesInternal Repo service for Bonds and Equities (refer to Cmax Product Guide). 
Market restrictionsNo 
FTTYesStamp duty incurred.
Daily reconciliationYes

Bilateral cancellation

No

Settlement finality

Settlement in the Hong Kong market is final upon settlement in the books of HKSCC and HKMA except for against payment securities settlement of so-called SIs in HKSCC for which the securities transfer is final upon settlement but cash only on SD+1.

Legal arrangements

The below section is based on the legal opinion obtained by CBL that was issued on 23 December 2016.  The information is provided for guidance only and should not be considered in isolation or as constituting a complete or definitive legal advice on any specific matter.

No insolvency proceedings against the custodian

Confirmed

Custodian liability for negligence

Confirmed

Book-entry regime with in rem rights

Confirmed

Recognition of nominee concept

Confirmed

No right of retention to the custodian

Confirmed

Segregation of assets at the custodian

Confirmed

No right of use

Confirmed

No upper-tier attachments

Confirmed

Insolvency of the custodian with no impact on CBL's rights 

Confirmed

Shortfall pro-rated among holders

Confirmed. Local law does not specifically address shortfall issues but a shortfall shall be borne on a pro rata basis by all the relevant account holders. Local court may however implement a different allocation approach (for example, "first in, first out" approach).

Settlement finality in case of insolvency

Confirmed