Settlement services - Hong Kong - China Connect securities

03.01.2018

Pre-matching service

The table below summarises CBL’s pre-matching service for external settlement instructions, as well as the pre-matching method and start time in the market. For details of CBL’s pre-matching services, see Pre-matching services for external settlement instructions.

Service offeredMethod employedStart (local time)
Stock Connect China A-shares
Immediate Release Flag availableAutomatic via CCASSSD
Bond Connect
Immediate Release Flag availableAutomatic or electronic in CMU systemSD-2

Connectivity mediumInstruction format
CreationOnline and Xact Web PortalTick to enable the “Immediate Release” option.
Xact via SWIFT and Xact File TransferField :22F::STCO/CEDE/IREL

For transactions in CCASS-eligible equities and warrants, when the counterparty is a custodian bank (Clearstream Banking), its safekeeping account with the receiving or delivering agent (Citibank) must be quoted in the settlement instructions.

In addition, the CCASS pre-matching system requires that the account numbers of global custodian accounts at the receiving/delivering agent be correctly formatted (see Account formats for Global Custodians).

N.B.: Customers are strongly urged to comply with global custodian account formats. Clearstream Banking is not in a position to verify these formats and non-compliance will result in unmatched and consequently unsettled trades, which may lead to a buy-in. Any costs, expenses or damages arising from incorrect formatting by the customer shall be borne by the customer exclusively.

Domestic allegement matching service

Complementary to the pre-matching services offered as described above and where no pre-matching instruction has been sent to the market, CBL accepts allegements via its depository from domestic market counterparties. It will then use these allegement messages to search for the best matching customer instruction.

If no matching customer instruction is found, the allegement is reported to the customer provided that its Clearstream Banking account number is present.

For details of CBL's domestic allegement service, see Pre-matching services for external settlement instructions.

Procedures for domestic counterparties

Procedure for the domestic counterpartyDeadline
Receipt in CBL / Delivery from CBL for Stock Connect China A-shares
Customers delivering/receiving securities to/from the Hong Kong market must request their domestic counterparty to receive/deliver the securities from/to CBL  with Citibank as follows:Market deadline
Receiving/Delivering Agent: Citibank Hong Kong, BIC: CITIHKHXXXX, CCASSID: C00010.
Receiver’s/Deliverer’s custodian: CBL (BIC: CEDELULL), for/from <10-digit segregated account provided during the onboarding process>.
Buyer/Seller: beneficiary's/ordering party's account number in CBL.
Receipt in CBL / Delivery from CBL for Bond Connect
Customers delivering/receiving securities to/from the Hong Kong market must request their mainland counterparty to receive/deliver the securities from/to CBL with Citibank as follows:Market deadline
Receiving/Delivering CMU Agent: Citibank Hong Kong, BIC: CITIHKHXXXX, <CMU sub-account provided during the onboarding process>

Allowed countervalue difference

Stock Connect China A-shares

A maximum difference in countervalue of CNY 10 only is allowed for matching and settlement of against payment transactions with domestic counterparties. In cases where the difference in the settlement amount does not exceed the stated tolerance limit set up by both parties, the amount specified by CBL will prevail.

Specific settlement rules/settlement restrictions

Stock Connect China A-shares

Customers who want to invest in Stock Connect China A-shares must open an SPSA (Special Segregated Account) and obtain an Investor ID via CBL (see “Stock Connect onboarding procedures” under Onboarding procedures).

For free of payment transactions, non-trade or off-exchange transfers are generally not allowed, except for:

  • Permitted SBL activities;
  • Transfers between EPs and their clients for the purpose of rectifying error trades;
  • Post-trade allocation of shares to different funds/sub-funds by fund managers; and
  • Other situations specified by SSE and ChinaClear.

Cash Settlement

The standard SPSA is not a 'True DVP' model as the cash proceeds will be confirmed either on T+0 after 21:25 HKT or on T+1 from 09:30 to 12:00 with good value to T.

Cash settlement on T+0 is optional. The CCASS cash clearing banks of both counterparties must sign up for T+0 RMB cash settlement.

A "True DVP" model is possible for customers who use any of the brokers (for example Citi Global Markets) who appoint Citibank as third party clearer or settlement agent. "True DVP" refers to receiving cash confirmation immediately upon settlement of the DVP transaction.

Customers who opt for real-time delivery versus payment (RDP) money settlement must check with their designated brokers to ensure they support RDP settlement as the RTGS flag is a settlement matching criteria. Please see RTGS instructions for Stock Connect. The securities settlement will be effected only after a payment from receiving party to delivering party is confirmed. Customers who operate under the “True DVP” settlement need not flag their instructions for RDP settlement.

Bond Connect

Customers who want to invest in Bond Connect must open a CMU sub-account and to apply for CFETS Trading ID via CBL (see “Bond Connect onboarding procedures” under Onboarding procedures).

Free of payment is not allowed. Transfer of securities between two CMU members and between two CMU sub-accounts are also not allowed.

Customers must instruct using either the ISIN or Common Code in their Bond Connect instructions. If an ISIN is not available during the bond issuance, customers must instruct using the Common Code. Please note that customers must continue to instruct using the Common Code even if the ISIN becomes available later.

Cash Funding and Settlement

CBL must see available funds for the Bond Connect purchase trades by 07:35 HKT, therefore customers are expected to prefund on SD-1.
To avoid process delays that might lead to settlement failure, it is highly recommended that customers send settlement instructions by SD-1 16:00 HKT for pre-matching purposes.

Cash Settlement

For receipt against payment settlement involving CCDC, the sub-custodian needs to transfer the settlement proceeds to the seller.

Customers should opt to provide standing instruction on safekeeping account level with the seller’s payment SSI during the Bond Connect onboarding process to avoid delay of process that might lead to settlement failure, otherwise customers must provide the seller’s payment SSI by SD-1 16:00 HKT.

For sending seller’s payment SSI, customer should submit a CreationOnline or SWIFT MT599 free-format message to Clearstream (BIC: CEDELULL) with the following details:

Attention: Settlement Singapore Team
Customer CBL Account Number:
Customer CBL Account Name:
Safekeeping account with Citibank Hong Kong:
Related RVP reference:
Please pay settlement to counterparty as per below SSI:
:57A:/<Account with institution> – Mainland Settlement bank’s BIC

:58D:/<Beneficiary’s account no> – Mainland dealer’s account number with its settlement bank

<Beneficiary’s name> – Mainland dealer’s account name

RTGS instructions for Stock Connect instruments

Real-Time Gross Settlement (RTGS) instructions for Stock Connect instruments must be flagged to indicate that they are to be processed for RDP settlement, as follows:

Connectivity mediumField to be usedValue
CreationOnlineProcessing IndicatorOptional Settlement Period
Xact via SWIFT and Xact File TransferField :22F: Real Time Gross Settlement Override Indicator, sequence E:RTGS//YRTG
Xact Web PortalSecurities RTGSYes

If the customer specifies YRTG, which is a matching criteria in the instruction, the counterparty must also match otherwise the transaction will be unmatched and ultimately fails on SD.

If, on a domestic instruction, the customer later wants to change the processing indicator, the original instruction must be cancelled and the customer must re-instruct with the new processing indicator value.

Management of failed instructions

For all eligible securities, the depository will re-present all settlement instructions for transactions that do not settle on the first possible value date in the domestic market to the respective domestic counterparties on each of the three subsequent domestic business days. For transactions that remain unsettled, CBL will automatically cancel the customer’s instruction on SD+3.

For unsettled deliveries, securities will be re-credited to customers’ accounts on SD+3.

Out-of-pocket expenses

Out-of-pocket expenses will be charged to the customer. These include, but are not limited to:

Stock Connect China A-shares

  • Depository Fees as applicable, CCASS portfolio fee ranging from 0.3 to 0.8 bps; and
  • Market fees and levies applicable to Stock Connect China A-shares (usually pass back by broker) - Handling Fee: 0.487 bps | Securities Management Fee: 0.2 bps | Transfer Fee: 0.4 bps | Stamp Duty: 10 bps of consideration of the seller.

Bond Connect

  • Custodian fee applicable, CMU portfolio fees ranging from 0.3 to 0.4 bps on a sliding scale basis. It is computed on a monthly average nominal value and calculated on 365-day basis;
  • Transaction fee of HKD200 will be charged on settlement for both secondary market trades and primary market issuance.

Out of pocket expenses are subject to change.

Note: As it is standard market practice for this duty to be included in the settlement countervalue, CBL customers do not need to specifically advise the stamp duty in their settlement instruction. Any stamp duty obligations applicable to FOP transactions must be clarified and processed with the relevant counterparty in a communication separate from the original instruction.
It is the customer’s responsibility to ensure compliance with applicable stamp duty requirements in regard to their Hong Kong equities transactions settled in the CBL system. CBL shall not be responsible for ensuring such compliance.