Settlement services - Hong Kong

02.07.2018

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)
Debt securities
Immediate Release Flag availableAutomatic or electronic in CMU systemSD
Equities
Immediate Release Flag availableAutomatic via CCASSSD-1

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 CCASS, non–CCASS eligible equities and warrants
Customers delivering/receiving securities to/from the Hong Kong market must request their domestic counterparty to receive/deliver the securities from/to CBL sub-account no. 8457910000 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 account 8457910000a.
Buyer/Seller: beneficiary's/ordering party's account number in CBL.
Receipt in CBL / Delivery from CBL for CMU instruments
Customers delivering/receiving securities to/from the Hong Kong market must request their domestic counterparty to receive/deliver the securities from/to CMU member code CIHK008 Citibank for CBL as follows:Market deadline
Receiving/Delivering Agent: Citibank Hong Kong, BIC: CITIHKHXXXX, CIHK: CIHK008.
Receiver’s/Deliverer’s custodian: CBL (BIC: CEDELULL), for/from account 8457910000.
Buyer/Seller: beneficiary's/ordering party's account number in CBL.

Allowed countervalue difference

CCASS-eligible instruments

A maximum difference in countervalue of USD 25 or currency equivalent is allowed for the matching and settlement of against payment transactions with domestic counterparties for all non–CMU-eligible instruments eligible in CBL’s link to the Hong Kong domestic market.

CMU instruments

A difference of less than HKD 1 only is allowed for the matching and settlement of against payment transactions with domestic counterparties for CMU instruments. In the case of a discrepancy, the CBL counterparty’s cash countervalue prevails.

Specific settlement rules/settlement restrictions

Against payment transactions with domestic counterparties in all eligible securities can be effected in HKD and CNY depending on the currency denomination of the securities.

RTGS instructions for CMU and CCASS instruments

Real-Time Gross Settlement (RTGS) instructions for CMU instruments are not required for domestic instruction because CMU settlement is real-time by default. 
Note: A domestic instruction flagged with "NRTG" will be rejected by CMU.

RTGS instructions for CCASS instruments must be flagged to indicate that they are to be processed in the mandatory and/or optional settlement processing, 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//YRTGa
Xact Web PortalSecurities RTGSYes

a. To settle in real time, the customer must specify ‘YRTG’. If ‘YRTG’ is not specified, the instruction will automatically settle during the intra-day batches.
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. For internal and Bridge instructions, this value can be changed post-release without having to cancel and re-instruct.

Back-to-back processing

Back-to-back processing is available for transactions in all dematerialised Hong Kong equities eligible in this market. If both the customer and the domestic counterparty meet their settlement obligations and fulfil the market's back-to-back requirements within the relevant deadlines, the linked receipt and the linked delivery will settle with same-day value. To benefit from this functionality, customers must ensure that their back-to-back instructions are formatted as follows, according to the connectivity medium used:

Connectivity mediumPool ID formatField(s) to be used
CreationOnline16x a
and
Turnaround
Pool Reference

Type of Settlement Transaction
Xact via SWIFT and Xact File Transfer:POOL//16x a
and
:SETR//TURN
Field :20C: sequence A1

Field :22F: sequence E

a. The reference (16x) must neither start nor end with a single slash "/’ nor must it contain two consecutive slashes "//".

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.

Non–CCASS-eligible equities and warrants

Securities that are not CCASS-eligible must be settled physically, whether free of or against payment, and will be immediately re-registered in Citibank’s nominee name (Citi (Nominees) Ltd).

Transfer of physical securities

Successful transfer of physical registered securities can only take place if the beneficial owner (name as it appears on the certificate) completes a Standard Form of Transfer (also known as a “Transfer Deed”).

For a copy of the Standard Form of Transfer, customers should contact their CBL Relationship Officer or their local broker.

For the Standard Form of Transfer to be considered valid, it must bear:

  • The transfer deed stamp; and
  • Stamps, from the buying and selling broker, confirming payment of ad valorem stamp duty.

Securities transfers that do not meet this requirement will be rejected by Clearstream Banking’s depository.

When completing the Standard Form of Transfer, customers must provide the name of the transferee in the mandatory “Transferee(s) names in English” section:

  • For transfers into or out of the CBL depository's vault: Citi (Nominees) Limited;
  • For transfer into or out of CCASS:HKSCC Nominees Limited.

Customers should send a completed original of the Standard Form of Transfer with the physical securities to CBL's depository in Hong Kong (see General information).

Out-of-pocket expenses

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

  • A registration fee of HKD 2.5 per board lot or per scrip, whichever is higher;
  • Transfer stamp duty of HKD 5.0, payable per transfer by the first deliverer of the registered securities;

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.