CCASS clearing services determine the stock and money obligations of participants to a securities transaction to deliver or receive either cash or securities.
CCASS provides settlement services under which securities are credited or debited to participants' CCASS stock accounts and funds are recorded in the participants' money ledgers on settlement day.
Transactions are classified into two categories----Exchange trades (trades in eligible securities executed on the Stock Exchange) and non-Exchange trades (such as settlement instruction, clearing agency transactions and investor settlement instruction).
Exchange Trades: Continuous Net Settlement (CNS) and Isolated Trades Systems
Details of all Exchange trades, including trade data and trade amendments, are electronically and automatically transmitted to CCASS by the Stock Exchange on each trading (T) day. There is no need for clearing participants to input or further confirm such trade details in CCASS. Clearing participants receive Provisional Clearing Statements of their stock and money positions through their CCASS terminals shortly after 18:00 and 20:00 hours on each T day for reconciliation. Final Clearing Statements are available to clearing participants shortly after 14:00 hours on T+1 day for confirmation purposes.
Exchange trades are settled under CNS system on a netting basis, unless isolated for settlement under the isolated trades system by the clearing participants at the time of the transaction or by HKSCC for risk management purposes.
Under CNS system, HKSCC becomes the settlement counterparty to both the buying and selling broker through novation. The single market contract between the clearing participants is novated into two market contracts, one between the delivering clearing participant and HKSCC; and the other between the receiving clearing participant and HKSCC. Acting as the settlement counterparty, HKSCC provides a form of settlement guarantee.
The stock transactions of a clearing participant in the same security on the same day are offset against each other, resulting in a single net stock position for the day. Any outstanding unsettled net stock positions of a clearing participant at the end of a settlement day are carried forward to the next settlement day and continuously netted against any opposite stock positions due for settlement in the same security.
Isolated Trades System
Isolated trades are settled on a trade for trade basis. HKSCC does not substitute itself as the settlement counterparty to isolated trades. The Company facilitates but does not guarantee settlement.
Non-Exchange Trades: Settlement Instruction (SI) , Clearing Agency Transactions and Investor Settlement Instruction (ISI)
SIs facilitate broker-custodian transactions, stock borrowing and lending, stock pledging and portfolio movements. Settlement of SI transactions is conducted on a trade for 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 amount of payment and settlement currency. HKSCC facilitates but does not guarantee settlement of SI transactions.
Clearing Agency Transactions
The Stock Exchange of Hong Kong Options Clearing House Limited was admitted as a clearing agency participant in CCASS in 1995. Transactions resulting from exercised traded options contracts are also transmitted to and settled in CCASS. Details of Clearing Agency Transactions to be settled in CCASS will be included in the second batch of Provisional Clearing Statement and Final Clearing Statement.
For transactions between investor participants and brokers or custodians which are CCASS participants to be settled in CCASS, the brokers or custodians which are CCASS participants must input ISIs, containing the relevant details required by HKSCC, into CCASS.
ISI transactions may include investor-intermediary transactions, stock borrowing and lending transactions, stock pledging transactions and portfolio movement.