CFCL Settlement – Hong Kong

Settlement process

Please refer to the Settlement process – Hong Kong for the complete information about the Settlement process.

Settlement services

Pre-matching service

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

For transactions in CCASS-eligible equities and warrants, when the counterparty is a custodian bank (Clearstream Banking, acting as a sub-custodian for CFCL), 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.: Clients are strongly urged to comply with global custodian account formats. Clearstream Fund Centre nor Clearstream Banking are 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 client shall be borne by the client exclusively.

Procedures for domestic counterparties

This section describes the procedures for domestic counterparties of the Hong Kong market:

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 CFCL’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 CFCL 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.

Dual Counter Model HKD-RMB

For clients to participate in the Dual Counter Model, HKD and RMB counters must be issued with separate ISIN codes (that is, one ISIN for the HKD counter and a different ISIN for the RMB counter). Settlement instructions deadlines and instruction formats remain the same as per current setup for the existing Hong Kong equities.

RMB (CNY) counter securities will not be Bridge eligible, only internal and domestic instructions are allowed.

Clients will not be able to safekeep and settle securities with an RMB counter if both HKD and RMB are issued with a single (same) ISIN code. In the scenario whereby CFCL has received a settlement instruction with a one ISIN issued with two counters, CFCL will settle the HKD counter by default.

The Dual Counter conversion service will not be available until further notice.

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:

a. To settle in real time, the client must specify ‘YRTG’. If ‘YRTG’ is not specified, the instruction will automatically settle during the intra-day batches.

If the client 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 client later wants to change the processing indicator, the original instruction must be cancelled and the client 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 client 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, clients must ensure that their back-to-back instructions are formatted as follows, according to the connectivity medium used:

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, CFCL will automatically cancel the client’s instruction on SD+3.

For unsettled deliveries, securities will be re-credited to clients’ 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).

Disclaimer

Clearstream Fund Centre does not accept any responsibility for any cross-border settlement delays. The instruction specifications contained on these webpages are correct at the time of publication for currently eligible securities.

Please note that Clearstream Fund Centre is not always advised of changes affecting these specifications. However, Clearstream Fund Centre will update the information on the Clearstream Fund Centre website as soon as it is made aware of any amendment.