Risk Management of Clearing and Settlement
Hongkong Clearing faces two major sources of risk in its operations: the risk of guaranteeing settlement of Stock Exchange trades, and the risk of ensuring good title to the securities in the depository.
Hongkong Clearing monitors and controls its exposure to risk to protect the interests of participants in CCASS, the Central Clearing And Settlement System, investors and the Hong Kong securities industry.
Under CCASS, Hongkong Clearing becomes the central risk taker by substituting itself as the universal counter- party to Exchange trades to be settled under CNS, Continuous Net Settlement. This effectively guarantees settlement of Exchange trades by clearing participants.