Market Link Guide - Hong Kong - China Connect securities

01.08.2019

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 (China A-shares via Stock Connect)
  • Hong Kong Monetary Authority, operating the CMU system (China Bonds via Bond Connect)

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

 

CSDs

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

HKSCC: Omnibus account

HKMA: Omnibus account

Omnibus account

Legal Account name / holder

HKSCC: securities are registered in the name of HKSCC Nominees Limited.

HKMA: securities are in the name of Citibank, N.A. Hong Kong branch.

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.

China A-shares via Stock Connect

Key services

Yes/No

Remarks

Settlement free of payment

Yes 

Please refer to specific settlement rules / settlement restrictions under Settlement services.

Settlement against payment

Yes

Eligible settlement currency: Chinese Renminbi (RMB).

Settlement against payment in central bank money account of CBL/CBL customerNoAgainst payment settlement in RMB takes place in the HKMA payment system on the cash account of Citibank Hong Kong acting as the clearing party.

Bridge settlement

No


Shaping facility

No


Partial settlement

No

Not market practice but is permissible with special arrangements.

Settlement penalty fees

Yes

Please refer to Settlement Process.

Pre-matching

Yes

Only on Settlement Date. Occurs upon receipt of customers’ instructions and is subject to counterparty availability.

Back-to-back processing

No


Allegements

Yes


Automatic compensation

No


Registered securities

Yes

 

Multi Market Securities

No


Lending and borrowing

No


Proxy voting

Yes

 

Investment Funds

No


Liquidity Hub Connect

No


Sale and purchase of rights

No


Repo services

No


Market restrictions

Yes

Please refer to Investment regulation.

FTT

Yes

Stamp duty incurred.

Daily reconciliation

Yes 

 Moment of entry of instructions

The CSD rules do not define the moment of entry within the meaning of the Settlement Finality Directive.
Irrevocability of instructionsSettled transactions are irrevocable.
Finality of instructionsSettlement in the Hong Kong market is final upon settlement in the books of HKSCC.

China Bonds via Bond Connect

Key services

Yes/No

Remarks

Settlement free of payment

No

Please refer to specific settlement rules / settlement restriction under Settlement services.

Settlement against payment

Yes

Eligible settlement currency: Chinese Renminbi (RMB).

Settlement against payment in central bank money account of CBL/CBL customerNoAgainst payment settlement in RMB takes place in the HKMA payment system on the cash account of Citibank Hong Kong acting as the clearing party.

Bridge settlement

No


Shaping facility

No


Partial settlement

No

 

Settlement penalty fees

Yes

Please refer to Settlement Process.

Pre-matching

Yes

Only on Settlement Date. Occurs upon receipt of customers’ instructions and is subject to counterparty availability.

Back-to-back processing

No


Allegements

No


Automatic compensation

No


Registered securities

Yes

 

Multi Market Securities

No


Lending and borrowing

No


Proxy voting

No

 

Investment Funds

No


Liquidity Hub Connect

No


Sale and purchase of rights

No


Repo services

No


Market restrictions

Yes

Please refer to Investment regulation.

FTT

No

 
Daily reconciliationYes 

Moment of entry of instructionsThe CSD rules do not define the moment of entry within the meaning of the Settlement Finality Directive.
Irrevocability of instructionsSettled transactions are irrevocable.
Finality of instructionsSettlement in the Hong Kong market is final upon settlement in the books of HKMA.

Legal arrangements

The below section is based on the legal opinion obtained by CBL that was issued on 20 February 2019. 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.


Custodian

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

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).

Record keeping period of at least 10 yearsThere is no general requirement under local law for Custodian to maintain records of services or activities with respect to its custody business for a period of at least 10 years. A retention period of records for a period of at least seven years was agreed with the Custodian.

Settlement finality in case of insolvency

Confirmed