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Risk Management of CNS Trades in All Markets

Securities-on-hold

Exchange Trades are due for settlement on T+2, the second trading day following the transaction, whereas for China Connect Securities Trades, stock settlement is due on T day. On the due day, HKSCC collects shares from the stock clearing accounts of Clearing Participants and Clearing Agency Participants (where applicable) with net short stock positions; and allocates shares to the stock clearing accounts of Clearing Participants and Clearing Agency Participants (where applicable) with net long stock positions under CNS. Money ledgers of Participants are updated simultaneously. For Hong Kong market, money settlement by Clearing Participants and Clearing Agency Participants through their Designated Banks is confirmed at day end of T+2 after securities have been delivered to Clearing Participants and Clearing Agency Participants under the CNS System in CCASS. For China Connect Market, money settlement by China Connect Clearing Participants is confirmed at noon of T+1.

Securities for which payment has not been confirmed are put on hold and Clearing Participants as well as Clearing Agency Participants are not allowed to use or withdraw them. However, a Clearing Participant or Clearing Agency Participant where applicable can make a cash prepayment to HKSCC in order to make immediate use of the securities. Such measure is also applicable to China Connect Market.

Integrated Surveillance

HKSCC has installed a surveillance system to monitor the trading activities and open positions of Clearing Participants and Clearing Agency Participants, in order to examine whether their exposure to risk is acceptable in relation to their financial resources. The surveillance system is conducted through real time trade data transmission. This enables HKSCC to be responsive to the market, and to calculate its risk exposure at any time. Clearing Participants and Clearing Agency Participants' positions are compared with their liquid capital or liquid capital equivalent where applicable and examined as to their degree of diversification in trading.

Clearing Participants and Clearing Agency Participants will be selected for further investigation if, for example, they have material open positions concentrated in a few stocks or trade beyond an acceptable level. HKSCC and the Stock Exchange of Hong Kong work closely together. They inform each other promptly of unusual trading and settlement activities; and of Clearing Participants and Clearing Agency Participants with financial problems, in order to reduce risk exposure and to maintain an orderly market.

Additional Collateral

HKSCC may require Clearing Participants and Clearing Agency Participants to put up collateral if their financial strength is in question, or their pattern of trading is creating excessive risk.

The amount of collateral is decided by HKSCC, after taking into account the financial strength of the Clearing Participants, and HKSCC's exposure to risk as settlement counterparty under CNS.

更新日期 2020年8月8日