Frequency Asked Questions – RMB Denominated Futures and Options 
11/10/2011 
 
The FAQ will be updated to include more detail and is subject to change.
Part 1: General 
Part 2: RMB Bank Account Setup 
Part 3: Clearing and Settlement 
Part 4: Risk Management 

  

Part 1.    General

 

 

1.1

Apart from acceptance of RMB as cash collateral for coverage of HKCC and SEOCH margin requirements, will there be RMB denominated derivatives products traded on the Exchanges (i.e. HKFE/SEHK) soon?

 

 

 

At this stage, the Exchanges are preparing for the readiness to introduce RMB denominated futures and option products. The Exchanges are in the process of exploring RMB denominated futures and options product opportunities.

  

Part 2.    RMB Bank Account Setup

 

  

2.1

Is it necessary for HKCC/SEOCH Participants to open RMB bank accounts and register the RMB bank accounts with HKCC/SEOCH before they are granted access to clear futures and options contracts settled in RMB?

 

  

 

In order to be eligible for clearing futures and options contracts that are settled in RMB, Participants need to open at least a RMB bank account for its house account and a RMB bank account for its client account with any one of the Designated/Settlement Banks providing RMB money settlement services. These bank accounts need to be set up with bank mandates and registered with HKCC/SEOCH in order to effect RMB money settlement.

 

 

2.2

Are there any charges and how long does it take to open a RMB bank account and register with HKCC/SEOCH?
    

HKCC/SEOCH does not charge any fees for setting up RMB bank account.  However, Participants can contact their banks to find out the costs, time and procedures required to open a RMB bank account.  Participants shall also complete relevant HKCC bank mandates and/or SEOCH bank mandates, where appropriate, and submit to HKCC/SEOCH. 

Provided that Participants have already opened the required RMB bank accounts, it will normally take about 3 weeks for banks to complete the relevant setup after HKCC/SEOCH has received the duly completed bank mandates. 

 

  

2.3

Where can HKCC/SEOCH Participants find the list of Designated/Settlement Banks that support RMB money settlement?
  

 

The list of HKCC Designated/Settlement Banks 
http://www.hkex.com.hk/eng/market/clr/dvclr/clrarng_hkccseoch/banklist_hkccseoch/HKCC_Banklist.htm
The list of SEOCH Designated/Settlement Banks
http://www.hkex.com.hk/eng/market/clr/dvclr/clrarng_hkccseoch/banklist_hkccseoch/SEOCH_Banklist.htm

   

Part 3.    Clearing and Settlement

 

 

3.1

How do Participants deposit or withdraw cash in RMB to or from HKCC/SEOCH?

 

 

 

Provided that Participants have registered the RMB bank accounts with HKCC/SEOCH, they can input the RMB cash deposit and withdrawal instructions via CCMS terminal by 11:00 a.m. on any business day in the same manner as HKD cash deposit and withdrawal. 

In case Participants have not registered RMB bank accounts with HKCC/SEOCH, they are required to notify HKCC/SEOCH of any RMB cash deposit or withdrawal in writing or by other means acceptable to HKCC/SEOCH as soon as possible latest by 11:00 a.m. on any business day.  Only after the receipt of the RMB deposit has been confirmed by the Settlement Banks of HKCC/SEOCH would the RMB deposit be accepted as cover for the margin requirements.  Normally, the release of RMB cash collateral can be effected the same day on which the release request is accepted. Participants are required to reimburse any incidental costs and charges in respect of the delivery of the cash collateral. 

 

 

3.2

How much interest will be rebated to Participants on the RMB cash margin deposits?

 

  

 

Interests will be rebated to Participants on the cash margin deposits at the prevailing bank saving deposit rate. In determining the prevailing bank savings deposit rate for RMB cash margin deposit, reference will be made to the simple average deposit saving rates (for deposit amount of HKD 120,000 equivalent) of the three notes-issuing banks in Hong Kong.  However, Participants will be charged with negative interest if the bank saving deposit rate is negative. 

 

  

3.3

What exchange rates would be used for valuation of the RMB cash collateral? 

 

  

 

The exchange rates for RMB cash collateral valuation would be determined with reference to the rates published on Reuters pages as at 4:00 p.m. of a business day.  Participants can find the exchange rates online via CCMS or in CCMS report "Collateral Parameters Information List" (CCMIR02). 

  

Part 4.   Risk Management

 

  

4.1

To what extent could RMB be used as cash collateral to cover margin requirements?

 

  

 

Both HKCC and SEOCH accept RMB as general cash collateral for satisfying HKCC and SEOCH margin requirements with the applicable haircut rate as determined by HKCC/SEOCH from time to time.  The margin requirements will first be satisfied by cash in the Settlement Currency, followed by cash denominated in any acceptable currencies (including RMB) other than the Settlement Currency and finally by any non-cash collateral. At least 50% of the total margin requirements for each CCMS Collateral Account of a Participant must be covered by cash in the Settlement Currency.