Settlement process - Hong Kong


Settlement cycles

Hong Kong Equities (scripless):


Stock Connect China A-shares (scripless)

Securities: T+0; Cash: T+0 a, T+1

Fixed income securities (scripless):

Settlement period is not fixed, freely negotiable between buyer and seller.

Bond Connect securities (scripless)

T+0, T+1, T+2 or T+3

Defaulted Bond on Maturity: T+1 or T+2

a. T+0 cash settlement is optional and is subject to the eligibility of the CCASS cash clearing bank of both counterparties.

Settlement flow

N.B.: Unless otherwise explicitly stated, all times in this section are Hong Kong local time.

1. CCASS settlement

CCASS provides settlement services under which securities are credited or debited to the stock accounts of CCASS participants and funds are recorded in the participants’ money ledgers on settlement date.

Transactions are classified into the following categories:

  • Exchange trades;
  • Non-Exchange trades:
    • Settlement instructions (SI);
    • Clearing agency instructions;
    • Investor settlement instructions (ISI).

CNS system

Unless isolated under the isolated trades system by the broker participants at the time of the transaction or by HKSCC for risk management purposes, exchange trades are settled under the CNS system on a netted basis.

Under the CNS system, HKSCC becomes the settlement counterparty to the buying and selling broker through novation. The market contract between the buyer and seller is novated by two new market contracts whereby HKSCC enters the contracts as counterparty to the buying and selling participant respectively. As the settlement counterparty, HKSCC provides a form of settlement guarantee.

The stock transactions of a broker participant are offset against each other, resulting in a net stock position to be settled. Any unsettled net stock position of a broker participant at the end of a settlement day is moved forward to the next settlement day and continuously netted against any stock position due for settlement.

Isolated trades system

Isolated trades are settled on a trade-by-trade basis. HKSCC does not substitute for the counterparty to isolated trades. HKSCC processes the settlement but does not guarantee such settlement transactions.

Settlement instructions (SI)

SIs facilitate broker-custodian transactions, stock borrowing and lending, stock pledging and portfolio movements. SI transactions are settled on a trade-by-trade basis. Input of SIs is required from both participants to effect settlement.

Clearing is effected by CCASS daily automatic batch matching of the details from two corresponding SIs, including the participants’ identities, the settlement date, stock code, quantity, payment instruction, instruction type and, if applicable, the payment amount. HKSCC does not guarantee such settlement transactions.

Clearing agency instructions

SEOCH is an accepted clearing agency participant in CCASS. Transactions resulting from exercised traded option contracts are transmitted to and settled in CCASS.

Investor settlement instructions (ISI)

For transactions between investor participants and broker or custodian participants to be settled in CCASS, the broker or custodian participant must input into CCASS ISIs that contain the relevant details required by HKSCC.

ISI transactions may include investor-intermediary, stock borrowing and lending and stock pledging transactions and portfolio movements.

Non-Stock Exchange transactions can be settled in the Old DVP System or the Realtime DVP System (RDP).

The Old DVP system

SIs input in the CCASS system are subject to matching. CCASS runs six matching batches on SD, at 09:30, 10:00, 11:30, 13:30, 14:30 and 15:15. Four settlement batches at 10:30, 12:00, 14:00 and 15:45. In order to ensure that all SIs input before 15:45 will be matched for settlement same-day, a further matching run is done immediately preceding the last settlement batch on each SD. For prematching purposes, additional matching runs are done at 15:45, 17:00 and 18:00 on SD-1.

The settlement of SI transactions is performed on a trade-by-trade basis by debiting and crediting the securities from the seller’s account to the buyer’s account. For DVP transactions, the cash settlement is done through electronic payment instructions given by CCASS to the participants’ designated banks through the Hong Kong Interbank Clearing Ltd. (HKICL).

Note: CCASS participants are obliged to maintain an account at a designated bank and to authorise HKSCC to initiate electronic instructions to debit or credit this account.

HKSCC reserves the right of recourse should the settlement amount be rejected due to insufficient cash on the participant’s designated cash account. Consequently, money settlement is done with same-day value but is not final until 09:30 on SD+1 (when there are no returned unpaid items) or 10:00 on SD+1 (when there are returned unpaid items).


Execution of trade.


Pre-matching batch run at 18:00.

SD:Matching and settlement of transaction through the five matching and settlement batch runs.

Cash settlement through HKICL as per HKSCC electronic instructions per same-day value but not final.

Finality of cash settlement.

The Real-time DVP system (RDP)

In the RDP mode, three match runs are conducted on SD, at 10:00, 11:30 and 13:30. Upon successful matching, shares are blocked for settlement (on-hold) at the delivering participant. When payment is confirmed as received by HKICL, settlement is performed immediately by releasing the on-hold shares to the receiving participant. Finality for cash and securities settlement is reached on SD.

If the payment cannot be confirmed by the cut-off time (about 15:30 on SD), the on-hold shares are released back to the delivering participant’s account before the final settlement batch run of the old DVP system.


Execution of trade.

SD:System conducts three matching batches. Settlement of cash and securities upon confirmation of cash settlement via HKICL.

Settlement is final.

2. CMU settlement

For real-time DVP:

  • The seller initiates the process by sending the buyer a settlement message through its CMU Member Terminal (CMT Station).
  • When the message has been confirmed by the buyer, a “matched” transaction is stored in the system.
  • The system checks the availability of securities on the seller’s account and blocks them (on hold).
  • If the buyer is a bank, an interbank payment message is generated from the buyer’s CMT Station.
  • If the buyer is other than a bank, the buyer must instruct his bank to execute a RTGS payment message.
  • Upon settlement of the payment instruction in the books of HKMA, a confirmed message is returned to the CMU Processor and the on-hold securities are released to the buyer.

If the transaction cannot be settled by cut-off time due to insufficient funds or securities, it is submitted to the next business day for settlement.

3. Stock Connect China A-shares settlement

HKSCC and ChinaClear have entered into an agreement to establish clearing links, whereby the two parties will undertake to the other to perform their settlement obligations in respect of the Northbound and Southbound trades.

For northbound trades, ChinaClear will act as the host central counterparty (CCP) and HKSCC will be a participant of ChinaClear. HKSCC will take up settlement obligations of its clearing participants (CPs) in respect of northbound trades and settle the trades directly with ChinaClear.


The customer places an order with its designated local broker. The broker checks the availability of adequate securities or cash and executes the trade upon successful provisioning. In order to prevent short selling, the trading system checks for the availability of the securities on the customer’s broker account.

Short selling and margin trading are allowed under certain conditions, which includes meeting the pre-trade checking requirement in certain circumstances. However, Securities Lending and Borrowing agreements for pre-trade checking purposes cannot be longer than one day (roll-over not allowed).

At the end of the day, CSDCC transfers the securities according to the trade data provided. Shares are automatically registered in the name of HKSCC Nominees Limited.
CSDCC will notify the expected cash payment by the end of T+0.


A customer with a net payable position must transfer funds to its clearing account with its domestic clearing bank by 12:00.

  • From 09:30 to 12:00, the broker (or its designated banks) makes payments to HKSCC in case of a net payable position.
  • At 12:30 HKSCC makes payments to the broker in case of a net receivable position.

CSDCC credits the custodians clearing account with the net receivable positions before 17:00.

Pre-trade checking

There are two models: the Original Pre-Trade Checking model and the Enhanced Pre-Trade Checking model.

Under the Original Pre-Trade Checking model, when placing orders, investors must ensure they have sufficient shares in their accounts opened with EP who acts as the selling broker. If the shares are kept in an account opened with another EP or custodian, investors must first transfer the shares to the selling EP on T-1 or via the morning SI on T day in order to sell their shares on T day.

The Enhanced Pre-Trade Checking model was introduced from 30 March 2015 to facilitate investors whose Stock Connect securities are maintained with custodians to sell their Stock Connect securities without having to pre-deliver the Stock Connect securities from their custodians to their executing brokers. Under the enhanced model, an investor whose Stock Connect securities are maintained with a custodian which is a Custodian Participant or a GCP which is not EP ("non-EP GCP") can request such Custodian Participant or a non-EP GCP to open a Special Segregated Account ("SPSA") in CCASS to maintain its holdings in Stock Connect securities. Each SPSA will be assigned a unique investor identification number ("Investor ID") by CCASS. The investor may designate at most 20 EPs as executing brokers which are authorised to use its Investor ID to execute sell orders in Stock Connect  securities on its behalf.

CCASS will take a snapshot of the Stock Connect securities holdings under each SPSA of a Custodian Participant or non-EP GCP and replicate such holdings to CSC to perform pre-trade checking. When the designated EP inputs such investor’s sell order, it shall also input the Investor ID with the sell order. Prior to sending the sell order to SSE/SZSE for execution, CSC will verify whether the EP is a designated broker for the investor and whether the investor has sufficient holding in its SPSA. If the sell order passes the checking, it will be accepted; otherwise it will be rejected. Under this model, an investor will only need to transfer the relevant Stock Connect securities from its SPSA to its designated broker’s account after execution and not before placing the sell order.

The SPSA arrangement allows the optional input of Investor IDs in buy orders. However, this indicator is only for SEHK Participants’ own reference and there will be no intraday update in clients’ stockholdings in their SPSAs.

For further details regarding settlement from different SPSA and erroneous input of Investor ID for sell orders using SPSA, please refer to the Information Booklet and FAQs posted on the HKEX website.

For Southbound trading, SSE and SZSE adopts the existing pre-trade checking mechanisms to the Mainland investors when they trade SEHK securities.

Clearing and Settlement Cycle

Either party will attempt to pre-match with counterparties on SD. Electronic pre-matching of instruction is available, but it is not binding.

SIs in Stock Connect Securities can be matched in any of the 9 SI matching runs at around 11:45, 13:45, 15:00, 16:45, 17:00, 17:30, 18:15, 19:00 and 19:45. Trades settle in one of the 5 SI batch settlement runs at 16:45, 17:30, 18:15, 19:00 and 19:45. CNS batch settlement runs are at 16:45, 17:30, 18:15 and 19:00.

Money settlement for Northbound trades will be effected by around noon on T+1 day. RMB cash settlement on T+0 after 21:25 is optional and is subject to eligibility of CCASS cash clearing bank that both counterparties use. The CCASS cash clearing banks must sign up for T+0 cash settlement.

Settlement instructions (SI)
17:30 - SI BSR / SPSA as Delivering A/C only (FOP, DVP)
19:00 - SI BSR / SPSA as Delivering A/C only (FOP, DVP)
19:15-19:45 - Evening SI BSR (FOP & DVP)

Cash settlement

Cash management

The HKD is freely convertible and no payment restrictions are applied by the Hong Kong authorities.

Payment systems

HKD Clearing House Automated Transfer System (CHATS)

CHATS is a real-time gross settlement system settling transactions on an individual and gross basis. A payment settled in the books of HKMA is regarded as final and irrevocable. Payment instructions settle immediately provided there is sufficient balance in the payer’s account. Banks can obtain interest-free intraday liquidity through intraday repo using Exchange Fund Paper.

Instructions for banks with insufficient credit balances or securities for intraday repo to execute outgoing payments are queued in the system. The queuing mechanism allows the banks to manage their own queues of payment instructions through cancellations or resequencing.

To access the CHATS RTGS system, banks must either connect through a Member Bank Terminal (MBT) or develop their own interface system that must follow the predefined transaction format and communication protocol adopted by MBT.

Payment Versus Payment (PVP) system

The HKD RTGS system is linked to the USD RTGS system for settlement of USD/HKD foreign exchange transactions on a PVP basis. PVP, known as the Cross-Currency Payment Matching Processor, ensures that both legs of HKD/USD foreign exchange transactions are settled simultaneously.

Electronic clearing (ECG)

ECG is a computerised system for clearing and settling various types of low-value electronic payments such as the following:

  • Autopay items: auto-debit and auto-credit instructions;
  • CCASS and IAH items: money settlement instructions related to CCASS transactions and investor participants;
  • EPSCO items: point of sale payments generated by the EPS Company (HK) Ltd.;
  • JETCO items: interbank payments in respect of transactions processed by Joint Electronic Teller Services Ltd.

Electronic files for various clearing types presented to the HKICL on day D are processed and clearing outputs are dispatched to the target banks on the same day.

USD clearing system in Hong Kong

In order to provide an efficient settlement system for USD transactions during Asian business hours, a USD clearing system was implemented in August 2000. The HKMA appointed the Hongkong and Shanghai Banking Corp. Ltd. as the settlement institution for the USD clearing system.

The USD clearing system functions and operation are the same as for the HKD clearing system. The key functions are as follows:

  • USD real-time gross settlement;
  • DVP for USD denominated debt securities through a link with the CMU;
  • CCASS real-time DVP;
  • PVP for USD/HKD foreign exchange transactions;
  • USD cheque clearing;
  • Electronic bulk clearing for CCASS-related transactions.

The USD settlement institution is a commercial bank, where each direct participant must maintain a settlement account and across whose books USD transactions are settled.

Participation in the USD clearing system is not mandatory. All USD online transactions are settled on a real-time and gross basis in the books of the USD settlement institution. Settled payments are final and irrevocable.

EUR clearing system in Hong Kong

HKMA appointed Standard Chartered Bank (HK) Ltd. as the settlement institution for the euro clearing system in Hong Kong. The key function of the EUR clearing system are as follows:

  • EUR real-time gross settlement;
  • DVP for EUR denominated debt securities through a link with CMU;
  • PVP for EUR/USD and EUR/HKD foreign exchange transactions.

Each EUR direct participant must maintain a settlement account with the EUR settlement institution, across whose books EUR transactions are settled.

Participation in the EUR clearing system is not mandatory. All EUR online transactions are settled on a real-time and gross basis in the books of the Euro settlement institution. Settled payments are final and irrevocable.


Registration procedures for non–CCASS-eligible securities

The transferor and the transferee must personally sign the transfer deed and their signatures must be witnessed before securities can be registered.

A purchaser sending securities for registration must do the following:

  • Date the transfer deed;
  • Complete all the particulars;
  • Sign as transferee;
  • Have the signature witnessed;
  • Send the deed and corresponding share certificates to the registrar;
  • Pay the registration fee to the registrar for each new certificate.

In order to qualify for a dividend or scrip issue, the securities must reach the registrar no later than one business day before books close date.

Registration is not mandatory, but takes approximately 10 business days and, during this period, certificates are not available for delivery. Most registrars offer an express registration service allowing registration within three days.

Registration procedures for CCASS-eligible securities

Securities received through CCASS does not require re-registration. Physical securities deposited with CCASS are credited immediately and can be registered within approximately 10 business days. During this period, participants can normally transfer their holdings, subject to recourse if the certificate turns out to be not of good title. In exceptional cases where no immediate credit is made by CCASS, such positions will be blocked on customer accounts upon settlement of receipt.

Securities held in CCASS are registered in the name of the common nominee, HKSCC Nominees Limited.

Registration of CMU instruments

Fixed income instruments traded in Hong Kong are mainly settled via CMU or CCASS. Re-registration is thus automatic upon settlement.

Ad valorem stamp duty (Hong Kong listed securities)

Ad valorem stamp duty on transfer costs is payable by each party on any transaction involving a change in beneficial owner at 0.26% of the value of the securities as at the date of stamping.

Ad valorem stamp duty on buy/sell transactions of listed securities is payable by each party at a rate of 0.13% (round up to the nearest dollar). A single rate of 0.26% is applied on free of payment transactions that involve a change of beneficial owner. The stamp duty is normally split between the buyer and the seller.

It is the responsibility of the investor to ensure that stamp duty is paid at the appropriate rate.

Under the Stamp Duty Ordinance, for transactions involving a change of beneficial owner, ad valorem stamp duty is payable as follows:

  • Within two days for trades executed in Hong Kong (exchange trades and off-market trades);
  • Within seven days for transfers effected without financial consideration (that is, gifts);
  • Within 30 days for off-market trades executed outside Hong Kong.

In the event of non-payment of ad valorem stamp duty (on transfer costs or buy/sell transactions), severe penalties are incurred, as follows:

  • Payment under one month late: stamp duty plus double the stamp duty amount.
  • Payment between one and two months late: stamp duty plus four times the penalty amount.
  • Payment over two months late: stamp duty plus 10 times the stamp duty amount.

For exchange trades executed via broker, the stamp duty is included in the contract note and the brokers pay the ad valorem stamp duty on behalf of their clients on settlement date.

Ad valorem stamp duty (A-shares via Stock Connect)

Ad valorem stamp duty on sell transactions will incur 0.1% of the consideration of a transaction on the seller.

Failed trades - buy-in and sell-out regulations for Stock Exchange trades

Under the rules of the SEHK (section 556), the party not in default reports to the exchange as soon as it becomes aware of a failure in delivery. The Council of the exchange may summon both parties for an explanation and, if appropriate, will call upon the party in default to effect the delivery within such reasonable time as the Council specifies. If the party in default fails to comply with the Council’s instruction at the expiry of the time limit, the Council may direct the member not in default to obtain the securities in the open market and the party in default will be responsible for any difference in price and all incidental expenses.

CCASS buy-in process

The HKSCC has implemented disciplinary actions to safeguard broker participants from late delivery.

If a participant is short of securities at the end of SD (T+2) and unless an exemption has been granted, HKSCC closes all short positions by executing a compulsory buy-in on behalf of the short participant on the morning of T+3 when the market opens.

The party in default must bear any price difference resulting from the buy-in and all incidental expenses. In addition, HKSCC imposes a 0.5% buy-in penalty and a maximum of HKD 100,000 per corresponding short stock position.

Buy-in exemptions

Broker participants applying for exemption from buy-in must submit an application form to HKSCC by fax not later than 08:00 on T+2. All evidence required for the particular exemption situation must be submitted no later than T+6.

If HKSCC does not grant an exemption or if there is a risk to HKSCC that is considered valid by the Risk Management Committee, HKSCC will effect a buy-in on behalf of the broker participant from 10:00h on T+3 through HKSCC’s authorised brokers.

The approved buy-in exemption situations are as follows:

  • The participant applying for the exemption has made a deposit of sufficient eligible securities into CCASS before 16:15 on SD but CCASS is unable to process the deposit before the final batch settlement run.
  • The relevant instrument of transfer has defects (for example, use of outdated instruments of transfer; the transferor’s signature in the wrong place; etc.) but there is prima facie evidence that the transferor has signed the instrument of transfer.
  • The relevant securities are credited to the deliverer’s account and the relevant settlement instruction is input for the transfer to the securities clearing account but, because of a clerical error, the settlement instruction is not matched.
  • The relevant securities are not credited to the securities account due to acts of God (such as fire, flood, typhoon, “Black Rainstorm”) or due to occurrence of other events beyond the participant’s reasonable control (such as labour dispute, strike, mechanical breakdown, computer or electronic system failure, unavailability of or restrictions of any communication medium).
  • The trade is oversold due to a clerical or calculation error. The delivery obligation of any such participant will be settled in full on T+3, pursuant to the purchase transactions executed by such participant on T+1.
  • In respect of assigned clearing agency transactions, the participant applying for exemption executed purchase transactions on T+1 and his delivery obligations will be settled in full on T+3.
    This exemption is an interim measure to accommodate the option exercise arrangements of the SEOCH. HKSCC will review this exemption from time to time.
  • A client has bought and sold the same securities on the same day through different brokers.
    This exemption is an interim measure to accommodate the current market practice relating to day trades. HKSCC will review this exemption from time to time.
  • The participant applying for exemption is due to receive sufficient eligible securities from a delivering participant via settlement instruction on T+2 and the delivering participant has received valid instructions from the selling client to make delivery but is unable to do so because the securities are received by the delivering participant in CCASS in the last batch settlement run on T+2.
    This exemption is an interim measure and subject to HKSCC’s review from time to time.
  • In respect of a creation or redemption of units, the participant has an unconditional entitlement to receive sufficient units or eligible securities on T+2 to cover the short position.
  • In respect of eligible securities subject to parallel trading on the exchange, the participant that is applying for exemption has long positions or sufficient holding in the securities account that, following conversion in CCASS, are sufficient to effect settlement of the relevant short positions on T+2.
  • The participant applying for exemption as a Pilot Programme Market Maker of any securities under the Pilot Programme or as an Exchange Traded Funds Market Maker of any designated exchange traded fund as specified by HKSCC either:
    • Has duly executed a cross-border transfer instruction transferring sufficient eligible securities to HKSCC’s account with the appointed depository to cover the short position resulting from its market making activities as aforesaid on T+2, but is unable to cover such a short position on T+2 because of a clerical error by the participant or by the appointed depository; or
    • Has sufficient securities to cover the relevant short position resulting from its market making activities as aforesaid on T+2, but the transfer of the eligible securities by cross-border transfer instructions to HKSCC’s account with the appointed depository cannot be effected to cover the relevant short position as result of a holiday in the U.S. market.
  • The person, who is under an obligation to deliver the relevant quantity of securities for settlement to the participant that is applying for exemption, had lent such securities and has duly executed a notice of recall pursuant to which such securities will be delivered to the participant on T+3 for settlement of its delivery obligation in full and that person is an approved lending agent as defined in the Securities and Futures Rules.

The broker participant to which an exemption from a buy-in is granted is obliged to settle all overdue short positions by the end of the day on T+3. If the participant fails to do so, HKSCC may, in its absolute discretion, consider execution of a buy-in on T+4.

Participants that have successfully claimed exemption three times within a rolling period of ten business days on the basis of failed delivery caused by the participant’s clerical error are considered to have abused the system and receive a warning letter from HKSCC. In such a case, any further application for exemption in the next four calendar weeks from the date of the third exemption will be rejected.

CMU buy-in process

The CMU has no defined policies regarding buy-in procedures. It unwinds all impacted positions and deletes the instructions for all failed trades. The resolution of the failed trades is subject to negotiation between the buyer and the seller.

Stock Connect China A-shares

A-shares market is a no-fail market. Any net short position after 2nd CNS BSR at 19.00 HKT on T day will be subjected to compulsory buy-in and default fees. In the event of the net short position after 19.00, the broker or its clearer (CP) will be subject to the following:

Default Fee

1.00% multiplied by the market value (based upon the closing price quoted on the relevant China Connect Market on the due date) of the corresponding short stock position in SSE/SZSE securities, subject to maximum fee of HK$200,000 for each corresponding short stock position in SS/SZSE securities.

Buy-in Cost

HKSCC will effect buy-in at what it determines to be the best prevailing market price and terms available, and pass back all the costs and expenses incurred with regards to the buy-in to the short CP.

  • HKSCC generates a Buy-in Notification Report for the CP.
  • HKSCC will effect buy-in on T+1. (or any time later if T+1 is not practicable)
  • After effecting such buy-in on T+1, relevant details will be available to the short CP.
  • Once HKSCC receives the cost of buy-in from the short CP, buy-in securities will be delivered to the CP.

On-hold SI

Delivering SI for the stock that is subject to the buy-in will be on hold if no on-hold exemption is granted. Therefore, CP may not transfer any shares related to that line of stock during T+0 evening SI BSR and T+1 morning SI BSR. SI on hold can be released during the evening of T+1 if the short position is covered by the CP or HKSCC is delivering the buy-in shares to the CP by 19:00 on T+1.

Bond Connect

Failed trades are allowed in Bond Connect. Trades are considered failed if not affirmed in CCDC/SCH system by either the buyer’s or seller’s settlement agent before 17:00 China time or being affirmed in CCDC/SCH system but does not settle on SD. Any trades that are executed and failed to settle are subject to settlement failure reporting as per PBOC and CFETs requirements.