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Collateral Management

HKSCC provides collateral management services with support of the Central Clearing and Settlement System (CCASS) and the Common Collateral Management System (CCMS), which allow Clearing Participants and China Connect Clearing Participants to use acceptable collateral to meet their marks, margin and other obligations according to the established collateral policy.

Form of Collateral

The following table sets out the types of collateral accepted by HKSCC for Clearing Participants and China Connect Clearing Participants to meet their obligations in Hong Kong market and China Connect Markets.

Acceptable Collateral

Marks, Concentration Collateral, Margin and Additional Collateral for Hong Kong Market

MSTD, MSCD and Additional Collateral for China Connect Markets

Guarantee Fund

Cash
HKD tick tick
RMB tick tick
USD tick

 Haircut

A Clearing Participant may select a Preferred Single Settlement Currency to settle all its Marks, Concentration Collateral and Margin requirements in that currency. To mitigate foreign exchange risk, haircut rates will be applied in converting the required Marks, Concentration Collateral and Margin obligations to the preferred currency. Participants may enquire the applicable haircut rates in CCMS.

Where the currency of the cash collateral is different from the settlement currency of the contract, the following haircuts rates will be applied:

Currency Exchange

Current Haircut Rate

RMB vs HKD  3.8%
          RMB vs USD            4.0%
USD vs HKD  0.7% 

Previous Haircut Rate

Collateral Securities and Specific Cash Collateral

Where a Clearing Participant or Clearing Agency Participant wishes HKSCC to reduce the Margining Position for computation of Margin, it may provide to HKSCC the relevant quantity of Collateral Securities representing a part or the whole of a short CNS stock position or the relevant amount of Specific Cash Collateral representing a part or the whole of a long CNS stock position.

A Clearing Participant or Clearing Agency Participant has to pay net unfavorable Marks in form of collateral accepted by HKSCC. Paying net unfavorable Marks by cash must be in Eligible Currencies of the CNS stock positions unless Preferred Single Settlement Currency was selected by Participants. CNS stock positions covered by Collateral Securities or Specific Cash Collateral are exempted from marking-to-market.

A Clearing Participant or Clearing Agency Participant provides Collateral Securities or Specific Cash Collateral to HKSCC represents and warrants to HKSCC that it has title and authority to provide such Collateral Securities or Specific Cash Collateral to HKSCC, free from all liens, charges, encumbrances, equities and all other third party rights of any nature whatsoever.


Updated 09 Oct 2019

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