Is 'Standing Intra Day Payment Instruction' service available?CCASS Participants can select to set up a Standing Intra Day Payment Instruction through CCASS Terminals to receive refund of any excess cash prepayment and/or receive their CNS money obligations due from HKSCC before the generation of Intra Day Payment instructions by CHATS, which is at around 2:30 pm on each business day.
What is the settlement arrangement if the RMB bank account has yet to set up?Where a Clearing Participant is in the process of opening a RMB bank account for CCASS money settlement purposes, HKSCC will make payment to the Clearing Participant by paper cheque or other means considered appropriate by HKSCC. For delivering Clearing Participants, payment will be made on the business day following the date of settlement. For receiving Clearing Participants, payment must be made directly into HKSCC’s designated RMB bank account before 5:45 pm on the date of settlement.
Can CCASS Participants set up a 'Standing Intra Day Payment Instruction' in RMB?CCASS Participants can select to set up a Standing Intra Day Payment Instruction through CCASS terminals to receive Corporate Actions related payment (CA payment) before the generation of Intra Day Payment instruction by CHATS, which is at around 2:30 pm on each business day. CCASS Participants which do not opt to receive intra-day CA payments will continue to receive such payments via DCI at day-end.
Why do CCASS Participants need to set up a designated bank account for RMB and what are the advantages? Will there be any issues if a CCASS Participant does not set up a designated bank account at this moment?CCASS Participants are required to set up a designated bank account for RMB if they are going to process CCASS transactions denominated in RMB electronically (e.g. receiving dividend payments in RMB if offered by issuers). Otherwise, HKSCC can only arrange for money settlement of RMB denominated transactions via cheque payment or such other means as considered appropriate by HKSCC. Therefore, Participants are strongly advised to set up the RMB bank accounts as soon as possible to avoid delay in providing RMB services to their clients.
A Participant can choose to set up a designated bank account for RMB later when it needs to process CCASS money transactions denominated in RMB. However, Participants should note that lead time is involved in setting up a designated bank account for RMB. They will not be able to handle money settlement of RMB denominated transactions electronically if they do not have a designated bank account for RMB. Therefore, CCASS Participants are strongly advised to set up a designated bank account for RMB as soon as possible to avoid delay in providing RMB services to their clients.
Are there any charges for setting up the designated bank account for RMB? How long does it take?HKSCC does not charge any fees for setting up CCASS money settlement service in RMB. However, CCASS Participants have to contact their Designated Banks to find out the costs, time and procedures required to set up a RMB bank account. CCASS Participants are also required to submit a “Renminbi Direct Debit Authorisation Form” to HKSCC.
It normally takes about three weeks for HKSCC to complete the set-up process depending on when HKSCC receives confirmation from the Participant’s Designated Bank for RMB transactions and HKSCC’s RMB Agent Bank.
Which form should CCASS Participants submit to HKSCC to set up the account and from where can CCASS Participants download the form?
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CCASS Participants other than Investor Participants are required to submit two forms for RMB money settlement service in CCASS: (1) ''Non-Investor Participant Setting Up of Renminbi Designated Bank Account Form'' and (2) ''Non-Investor Participant Renminbi Debit Authorisations and Authorisation to Disclose Information Form'' (DDA). These forms are available at: http://www.hkex.com.hk/eng/market/clr/secclr/forms_hkscc/Formshksccpart.htm.
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| (b) |
Investor Participants have to submit: (1) ''Investor Participant Setting Up of Renminbi Designated Bank Account Form'' and (2) ''Investor Participant Renminbi Debit Authorisations and Authorisation to Disclose Information Form'' (DDA). These forms are available at: http://www.hkex.com.hk/eng/prod/clr/sec_clrsett/ipacctsvc/formsdownload.htm and Forms Download in the CCASS Internet System. However, Individual Investor Participants should note that only Hong Kong residents can open RMB bank accounts in Hong Kong for the time being. |
| (a) |
CCASS Participants other than Investor Participants are required to submit two forms for RMB money settlement service in CCASS: (1) ''Non-Investor Participant Setting Up of Renminbi Designated Bank Account Form'' and (2) ''Non-Investor Participant Renminbi Debit Authorisations and Authorisation to Disclose Information Form'' (DDA). These forms are available at: http://www.hkex.com.hk/eng/market/clr/secclr/forms_hkscc/Formshksccpart.htm.
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| (a) |
CCASS Participants other than Investor Participants are required to submit two forms for RMB money settlement service in CCASS: (1) ''Non-Investor Participant Setting Up of Renminbi Designated Bank Account Form'' and (2) ''Non-Investor Participant Renminbi Debit Authorisations and Authorisation to Disclose Information Form'' (DDA). These forms are available at: http://www.hkex.com.hk/eng/market/clr/secclr/forms_hkscc/Formshksccpart.htm.
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| (a) |
CCASS Participants other than Investor Participants are required to submit two forms for RMB money settlement service in CCASS: (1) ''Non-Investor Participant Setting Up of Renminbi Designated Bank Account Form'' and (2) ''Non-Investor Participant Renminbi Debit Authorisations and Authorisation to Disclose Information Form'' (DDA). These forms are available at: http://www.hkex.com.hk/eng/market/clr/secclr/forms_hkscc/Formshksccpart.htm.
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| (a) |
CCASS Participants other than Investor Participants are required to submit two forms for RMB money settlement service in CCASS: (1) ''Non-Investor Participant Setting Up of Renminbi Designated Bank Account Form'' and (2) ''Non-Investor Participant Renminbi Debit Authorisations and Authorisation to Disclose Information Form'' (DDA). These forms are available at: http://www.hkex.com.hk/eng/market/clr/secclr/forms_hkscc/Formshksccpart.htm.
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| (a) |
CCASS Participants other than Investor Participants are required to submit two forms for RMB money settlement service in CCASS: (1) ''Non-Investor Participant Setting Up of Renminbi Designated Bank Account Form'' and (2) ''Non-Investor Participant Renminbi Debit Authorisations and Authorisation to Disclose Information Form'' (DDA). These forms are available at: http://www.hkex.com.hk/eng/market/clr/secclr/forms_hkscc/Formshksccpart.htm.
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| (a) |
CCASS Participants other than Investor Participants are required to submit two forms for RMB money settlement service in CCASS: (1) ''Non-Investor Participant Setting Up of Renminbi Designated Bank Account Form'' and (2) ''Non-Investor Participant Renminbi Debit Authorisations and Authorisation to Disclose Information Form'' (DDA). These forms are available at: http://www.hkex.com.hk/eng/market/clr/secclr/forms_hkscc/Formshksccpart.htm.
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| (a) |
CCASS Participants other than Investor Participants are required to submit two forms for RMB money settlement service in CCASS: (1) ''Non-Investor Participant Setting Up of Renminbi Designated Bank Account Form'' and (2) ''Non-Investor Participant Renminbi Debit Authorisations and Authorisation to Disclose Information Form'' (DDA). These forms are available at: http://www.hkex.com.hk/eng/market/clr/secclr/forms_hkscc/Formshksccpart.htm.
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| (a) |
CCASS Participants other than Investor Participants are required to submit two forms for RMB money settlement service in CCASS: (1) ''Non-Investor Participant Setting Up of Renminbi Designated Bank Account Form'' and (2) ''Non-Investor Participant Renminbi Debit Authorisations and Authorisation to Disclose Information Form'' (DDA). These forms are available at: http://www.hkex.com.hk/eng/market/clr/secclr/forms_hkscc/Formshksccpart.htm.
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| (a) |
CCASS Participants other than Investor Participants are required to submit two forms for RMB money settlement service in CCASS: (1) ''Non-Investor Participant Setting Up of Renminbi Designated Bank Account Form'' and (2) ''Non-Investor Participant Renminbi Debit Authorisations and Authorisation to Disclose Information Form'' (DDA). These forms are available at: http://www.hkex.com.hk/eng/market/clr/secclr/forms_hkscc/Formshksccpart.htm.
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What are the CCASS admission criteria for Designated Banks for RMB?
Existing CCASS Designated Banks for HKD/USD should complete and return the ''Undertaking(s) for Renminbi'' together with a certified true copy of the board resolution authorising the execution of the Undertaking(s) and Questionnaire to HKSCC. In addition, a testing between HKICL and the Designated Bank is required if the Designated Bank selects to receive the RMB reports from HKICL in electronic file/tape form. HKICL issued a circular to its member banks on 12 August 2010 about the interface test arrangement. For details, please contact HKICL.
If a bank is not yet a CCASS Designated Bank, it should contact HKEx’s Cash Market – Participant Services (CM-PS) team and submit the prescribed application form. Banks which are interested in providing RMB money settlement service are also required to execute the Undertaking as mentioned in the above paragraph and do interface testing to receive the RMB reports from HKICL in electronic file/tape form. It may take four weeks to complete the application process. For details, please refer to Section 14.2.3 of the CCASS Operational Procedures or call CM-PS at 2840-3626.
Can OTP-C support trading of RMB products? The Orion Trading Platform – Securities Market (OTP-C) is a multi-currency system which is capable of supporting transactions in RMB products (with currency code 'CNY’ in OTP-C) in a manner similar to that applicable to products denominated in HKD and USD.
How to calculate the stamp duty payable for transactions denominated in RMB?As confirmed by Inland Revenue Department, the foreign currency denominated consideration of a transaction should be converted into HK dollar before applying the stamp duty rate. The stamp duty derived therefrom should then be rounded up to the nearest HK$1.
Example: a transaction of RMB10,000
Consideration =HK$11,710 (RMB10,000 @ exchange rate of 1.171)
Stamp duty @0.1% =HK$11.71
Stamp duty payable =HK$12.00 (rounded up to the nearest HK$1)
What are Renminbi (RMB) currency futures? What are their characteristics?
RMB currency futures are futures contracts based on the exchange rates between RMB and other currencies. HKEX’s first RMB currency futures contract is based on the currency pair USD/CNH. CNH refers to the RMB circulated in Hong Kong. They are the first exchange-traded currency futures settled in RMB.
HKEX's RMB currency futures contract is designed to provide a way for investors to hedge RMB exposure. It requires delivery of USD by the seller and payment of the Final Settlement Value in RMB by the buyer at maturity. Contract is quoted in RMB per USD and margined in RMB, with the trading and settlement fees charged in RMB. The final settlement price of the contract is based on the spot USD/CNY(HK) fixing published by the Treasury Markets Association (TMA) at 11:15 am on the Last Trading Day. The Last Trading Day is two business days prior to the Final Settlement Day, which is the third Wednesday of the Contract Month.
What is TSF?
In addition to other channels (such as licensed banks and brokers) where Renminbi (RMB) can be exchanged or sourced, the RMB Equity Trading Support Facility, or Trading Support Facility (TSF), is designed to serve as a back-up facility to enable investors who wish to buy RMB-traded shares (“RMB shares”) in the secondary market in Hong Kong Dollar (HKD) if they do not have sufficient RMB or have difficulty in obtaining RMB from other channels.
Does the TSF support initial public offering?The TSF is primarily designed to support the trading of RMB shares on the secondary market operated by The Stock Exchange of Hong Kong Limited (“SEHK”), a subsidiary of HKEX. The use of the TSF is not a pre-requisite for the initial public offering or listing of RMB products on SEHK.
What is the fund size of the TSF?
The fund size of the TSF is determined by taking into account a number of factors including the amount of RMB available in Hong Kong (i.e. CNH). The funds available to the TSF is maintained at an appropriate level in view of the total RMB deposit base in Hong Kong. HKEX expects the initial size of the TSF to be modest and relative to the size of the RMB share offerings to be made to the Hong Kong market. It is also expected that over time, the fund size of the TSF will be adjusted to reflect the market demand for RMB listed products, the underlying usage of the TSF and the overall RMB deposit base in Hong Kong. The TSF will be operated and maintained to help support and sustain the development of the RMB equity market in Hong Kong and for such period as is needed to achieve this purpose.
Does the TSF support all RMB stocks traded on the SEHK including authorized unit trusts and derivative warrants?The TSF supports trading of RMB-traded shares in the secondary market initially. However, RMB counter of Dual Counter Securities are excluded from this facility.
Other types of securities, such as non-equity related exchange traded funds (e.g. Hang Seng RMB Gold ETF – stock code: 83168), derivative warrants and callable bull/bear contracts (CBBCs) are not supported at this stage. This is to ensure the best use of the RMB funds available to the TSF. HKSCC, as the TSF operator, may review this policy from time to time as appropriate. A list of securities to be supported by the TSF will be updated and published on the HKEX website (Please click here). What do Participants need to do if TSF suspends the FX Services?The provision of FX Services by the TSF is subject to the availability of funds or the FX facility from the TSF Partner Banks. The FX Services may be suspended when, among other reasons, HKSCC has reasonable grounds for concern that the RMB or HKD funding may not be sufficient to support the fulfillment of its obligations under any FX order or transaction. When a suspension takes place, trades on the Exchange which are supported by the FX Services executed after the effective time of suspension will not be acknowledged as TSF supported trades. Accordingly, Participants will have to be responsible for obtaining its own funds in RMB in respect of buy orders after the effective time of suspension; and in respect of sale orders, Participants will have to accept the sale proceeds in RMB.
Based on the model currently envisaged, an announcement on the potential suspension of the TSF will be made to alert the market (through the existing channels including OTP-C, CCASS Terminal and the HKEX website) when the FX facility available to the TSF drops to a particular prescribed level. In such circumstance, Participants should assess their risk exposure, consider whether to amend or cancel their outstanding TSF FX orders which have been input into the trading system and consider taking steps to suspend clients’ orders for the FX Services (e.g. by blocking incoming TSF Buy Orders via online trading platform).
If HKSCC ultimately decides to suspend all or part of the FX Services, it will publish an announcement on the HKEX website and/or by such other means as HKSCC considers appropriate, stating which part of the FX Services will be suspended, whether any trade supported by a TSF FX transaction (a “TSF FX Transaction”) or a FX transaction entered into for the purpose of de-earmarking RMB shares (a “Stock Release FX Transaction”) will be affected, the effective date and time of suspension and any other information as HKSCC may consider appropriate. Where suspension takes effect, Participants should consider taking steps to adjust relevant records in their systems and communicate with their clients regarding those trades that are supported by the TSF and those that are not. In addition, Participants may also have to consider adjusting their funding positions (e.g. by obtaining additional RMB funding as mentioned above).
Participants are referred to section 12A18 of the CCASS Rules for information on the temporary suspension of the TSF.
What types of Participants are eligible to use the FX Services to be provided by the TSF?There is no mandatory requirement to use the FX Services. However, Participants who wish to utilize the TSF are required to comply with the registration criteria of SEHK and/or HKSCC (as the case may be).
For the purposes of trading RMB shares, the TSF will be available to the following types of Participants provided that they comply with the TSF Participant Registration Criteria of SEHK:
1) EPs who are themselves Direct Clearing Participants under the CCASS Rules and who comply with the TSF Participant Registration Criteria of HKSCC; and
2) EPs who are not Direct Clearing Participants but who have entered into a clearing agreement with a General Clearing Participant under the CCASS Rules and where the General Clearing Participant complies with the TSF Participant Registration Criteria of HKSCC.
EPs are referred to SEHK Rule 563H for further information.
For the purposes of clearing and settling trades concerning RMB shares, the TSF will be available to the following types of CCASS Participants provided that they comply with the TSF Participant Registration Criteria of HKSCC:
1) Direct Clearing Participants who are EPs under the SEHK Rules and who comply with the TSF Participant Registration Criteria of SEHK;
2) General Clearing Participants who have entered into a clearing agreement with an EP (who is a Non-Clearing Participant under the CCASS Rules) and where the EP complies with the TSF Participant Registration Criteria of SEHK; and
3) Custodian Participants who comply with the TSF Participant Registration Criteria of HKSCC.
A General Clearing Participant should ensure that the clearing agreement it enters into with Non-Clearing Participants include an obligation on its part to settle TSF supported trades and all corresponding TSF FX Transactions. The General Clearing Participant should also consider bringing a Non-Clearing Participant’s attention to the special features and restrictions of the TSF. Participants are referred to Rules 12A03 and 12A21 of the CCASS Rules for further information.
Investor Participants, Stock Lender Participants and Stock Pledgee Participants under the CCASS Rules will not be permitted to use the TSF at the initial stage.
A participant who has complied with the relevant criteria set out above is referred to as a “TSF Participant”.
Who will be parties to a TSF FX Transaction?
For TSF Participants who use the FX Services of the TSF, TSF FX Transactions will be deemed to be entered into between the Participant and HKSCC, as the operator of the TSF. The TSF only offers two types of FX Services: conversion from HKD to RMB and from RMB to HKD.
How are the RMB FX Rates determined?
The TSF sources or exchange RMB and HKD from one or more Hong Kong licensed banks which HKSCC has established arrangements with (the “TSF Partner Banks”) after taking into account, among others, the demand of both currencies from TSF Participants on a daily basis. The FX transactions between HKSCC and the TSF Partner Banks serve as back-to-back transactions to support the execution of FX transactions between TSF Participants and HKSCC, as the operator of the TSF. The exchange rates to be used by the TSF will be set by reference to the rates provided by the TSF Partner Banks on a commercial basis.
Why are there two sets of RMB FX Rates for the morning and afternoon sessions instead of one set for the whole day?Under the current arrangement, TSF Partner Banks are obliged to provide “RMB Indicative FX Rates” to the TSF before the morning session and the afternoon session for reference by the Participants and investors. Subsequently, they are required to provide the respective “Final FX Rates” in view of the TSF’s FX demands at the specified times. The Final FX Rates should be equal to or better than the RMB Indicative FX Rates. FX rates published for the morning session apply to trades concluded during the Pre-opening session.
If only one set of FX rates are provided for the whole trading day, the TSF Partner Banks may have to quote the RMB Indicative FX Rates with wider spreads in order to limit their FX exposure. As a result, the rates may not provide as good a reference value to the Participants and the investors as intended.
To balance the risk exposure of TSF Partner Banks and benefits to Participants and investors, the TSF is currently designed to provide separate RMB FX Rates for the morning and the afternoon trading sessions. Is there any input requirement when an EP wishes to input an order to buy or sell shares in OTP-C and use the FX Services for money settlement of the share transaction?Where an EP (who is a TSF Participant) wishes to use the FX Services in support of a share transaction on the OTP-C, the EP will effectively be entering into two separate transactions: (i) the transaction to buy or sell the relevant shares; and (ii) the FX transaction to buy or sell RMB (depending on whether the share transaction is a buy or a sell transaction). To indicate the use of the TSF service, an EP is required to input any order to buy or sell shares into OTP-C in the following manner:
An order to buy shares using the TSF service (“TSF Buy Orders”) must be input in the form of an At Auction Order (“AAO”) or a Special Limit Order (“SLO”) and be identified with the indicator “TSF” in the first three characters of the Reference field or BSS Broker Comment field at the time of input. Any TSF Buy Order which has not been input correctly will be considered invalid. Examples of an invalid TSF Buy Order include a buy order with an order type other than an AAO or a SLO but with the “TSF” indicator input, and a buy order in the form of an AAO or a SLO but without the “TSF” indicator input. Invalid TSF Buy Orders which have been matched will not be treated as TSF trades and Participants will be required to settle the relevant trades in RMB, not HKD.
An order to sell shares using the TSF Service (“TSF Sell Orders”) can be input in the form of any order type and must be identified with the indicator “TSF” in the first three characters of the Reference field or BSS Broker Comment field at the time of input. Any TSF Sell Order which has not been input correctly will be considered invalid, for example, sell orders of any order type without the “TSF” indicator input. Invalid TSF Sell Orders which have been matched will not be treated as TSF trades and sale proceeds will be settled in RMB, not HKD.
Can an EP change the request for using the TSF for an order?
Before the TSF order is automatched on the OTP-C, an EP (who is a TSF Participant) may remove the “TSF” indicator from the order and the order will not be treated as a TSF order. Once the TSF order is matched, the request for the FX service is irrevocable.
Why does the TSF restrict the order types for buy trades?
TSF Buy Orders must be input in the form of an At Auction Order (AAO) or a Special Limit Order (SLO).Any outstanding AAO or SLO after matching will be cancelled automatically and will not be stored in OTP-C.This feature will ensure that buy orders specified for using the TSF FX Services will be settled with certainty via the TSF and investors can be assured of execution certainty.
How can investors submit TSF Orders?
Investors who intend to use the TSF can instruct their brokers who have been registered as TSF Participants to request for the FX Services.With the instructions of the investors, the brokers (as TSF Participants) could then input TSF orders in OTP-C.Investors, however, may have their own sources of RMB funding and may not need to tap into the TSF.The TSF is meant to be a back-up FX facility.There is no requirement to use the TSF’s FX Services.
What should investors be aware in placing TSF Orders through their brokers?Only the trading of “TSF Stocks” and only TSF Participants are eligible for using the TSF. Before placing TSF orders, investors should ensure the RMB shares that they want to trade is on the “List of TSF Stocks” and their brokers are on the “List of TSF Participants”.
Investors should also check with their brokers the relevant terms, fees, operation flows and agreement that need to be signed for using the TSF.
Moreover, they should check the TSF RMB FX Rates or request brokers to advise them of the rates before instructing their brokers to use the FX Services. The TSF publishes RMB Indicative FX Rates and RMB Final FX Rates (along with the Fund Balance for “TSF BUY” and “TSF SELL”)* on the HKEX website on each trading day for TSF trades. The RMB Indicative FX Rates are available on the HKEX website at around 9:30 am (in respect of trades to be conducted in the pre-opening session and the morning session) and 1:00 pm (in respect of trades to be conducted in the afternoon session) and are for reference only. The RMB Final FX Rates are available after the close of the respective sessions for settlement between the TSF and the brokers. The RMB Final FX Rates will be equal to or better than the relevant Indicative FX Rates. As different rates will apply to different trading sessions, investors should check the applicable rates with their brokers for settlement of TSF trades.
Because of the “HKD in and HKD out” principle, investors should note that they MUST receive sale proceeds in HKD and not RMB unless a Stock Release Request is effected. Therefore, when selling RMB shares purchased through the use of the TSF, TSF Participants are obliged to use the FX Service for the conversion of the RMB sale proceeds to HKD prior to releasing the proceeds to investor clients. Investors should also note that physical certificates of RMB shares purchased with the support of the TSF cannot be withdrawn from CCASS unless they have been released from earmarking through the Stock Request Release procedure.
Furthermore, brokers are obliged to settle FX transactions with the TSF once a TSF order is matched. Investors may be required to make the same commitment to their brokers and should check with their brokers what arrangement applies.
*Note: The Fund Balances are static figures and are updated 3 times a day only. The market will be alerted when the Fund Balance drops to a prescribed level. Participating brokers should consider not accepting TSF Buy Orders when the TSF Services may be suspended soon due to the availability of fund. Also, participating brokers may receive RMB for their TSF Sell Orders if the trades are executed after the Fund Balance of “TSF BUY” drops to zero.
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Only the trading of “TSF Stocks” and only TSF Participants are eligible for using the TSF. Before placing TSF orders, investors should ensure the RMB shares that theywant to trade is on the “List of TSF Stocks” and their brokers are on the “List of TSF Participants”. Both lists are available on the HKEx website.
Investors should also check with their brokers the relevant terms, fees, operation flows and agreement that need to be signed for using the TSF.
Moreover, they should check the TSF RMB FX Rates or request brokers to advise them of the rates before instructing their brokers to use the FX Services (see also Questions 3.2 and 3.4 above). The TSF publishes RMB Indicative FX Rates and RMB Final FX Rates (along with the Fund Balance for “TSF BUY” and “TSF SELL”)* on the HKEx website on each trading day for TSF trades. The RMB Indicative FX Rates are available on the HKEx website at around 9:30 am (in respect of trades to be conducted in the pre-opening session and the morning session) and 1:00 pm (in respect of trades to be conducted in the afternoon session) and are for reference only. The RMB Final FX Rates are available after the close of the respective sessions for settlement between the TSF and the brokers. The RMB Final FX Rates will be equal to or better than the relevant Indicative FX Rates. As different rates will apply to different trading sessions, investors should check the applicable rates with their brokers for settlement of TSF trades.
Because of the “HKD in and HKD out” principle (see Question 5.2), investors should note that they MUST receive sale proceeds in HKD and not RMB unless a Stock Release Request is effected. Therefore, when selling RMB shares purchased through the use of the TSF, TSF Participants are obliged to use the FX Service for the conversion of the RMB sale proceeds to HKD prior to releasing the proceeds to investor clients. Investors should also note that physical certificates of RMB shares purchased with the support of the TSF cannot be withdrawn from CCASS unless they have been released from earmarking through the Stock Request Release procedure (also see Question 5.11).
Furthermore, brokers are obliged to settle FX transactions with the TSF once a TSF order is matched. Investors may be required to make the same commitment to theirbrokers and should check with their brokers what arrangement applies.
*Note: The Fund Balances are static figures and are updated 3 times a day only. The market will be alerted when the Fund Balance drops to a prescribed level. Participating brokers should consider not accepting TSF Buy Orders when the TSF Services may be suspended soon due to the availability of fund. Also, participating brokers may receive RMB for their TSF Sell Orders if the trades are executed after the Fund Balance of “TSF BUY” drops to zero.
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How does TSF FX settlement work?While a bid/ask rate will apply to each TSF Exchange Trade and the total value of TSF FX Transactions to be settled by a CCASS Participant (which must be a TSF Participant) is to be calculated on a gross basis, the money settlement amount applicable to a CCASS Participant will be paid on a net basis on each Business Day that HKSCC is open for business. The settlement cycle will follow the standard settlement cycle for equity securities listed and traded on SEHK, with RMB and HKD payments effected through existing CCASS settlement payment methods including RTGS and CCASS money settlement instructions.
What is the “share earmarking” concept and how does it work?To maximize the availability of RMB to the TSF for the provision of FX Services, it is a key feature of the TSF that only HKD is accepted for the purchase of RMB shares (via the FX Services from HKD to RMB); and only HKD is allowed to be paid as sale proceeds for the sale of those RMB shares (via FX Services from RMB to HKD) – the “HKD in and HKD out” principle.
For the purpose of maintaining the “HKD in and HKD out” principle, RMB shares purchased via the use of the TSF will automatically be transferred from the clearing account of a CCASS Participant (which is a TSF Participant) into a segregated stock account specifically designated as “TSF Account” in CCASS. Shares transferred into a TSF Account are regarded as having been “earmarked”. These earmarked shares can be transferred to the “TSF Account” of other CCASS Participants who are also TSF Participants (e.g. a custodian participant) via SI but not to other accounts.
Is a TSF Participant required to transfer TSF Stocks from account 17/18 to 01 for CNS settlement?No. Participants are not allowed to transfer TSF Stocks out of their TSF Account. The transfer is normally done by CCASS automatically. The Participant is required to ensure that there are sufficient TSF Stocks in its TSF Principal Account 18 for de-earmarking.
If sufficient TSF Stocks are kept in the TSF Principal Account 18, TSF will transfer the net TSF Sell Stock Position automatically before each Batch-settlement-run from TSF Principal Account 18 to Clearing Account 01, until the full amount of shares for de-earmarking is being transferred.
If the stocks are kept in TSF Segregated Account 17 or with other participants, the Participant will need to transfer the stock to the TSF Principal Account 18 via ATI / SI.
When and how should a TSF Participant prepare funds for settling TSF FX transactions?Participants can refer to the “TSF Confirmation Report (CSETF07)” available at around 6 pm daily for funding preparation to settle TSF FX transactions. Section 3 on “projected stock transfers and money obligations to be settled on the respective settlement days” sets out the money obligation due at different times of a payment day in detail.
What happens if a TSF CCASS Participant does not settle its TSF FX Transactions?If a TSF CCASS Participant fails to settle any of its TSF FX Transaction, HKSCC is entitled to (1) not settle any of its corresponding money positions of the TSF FX Transaction in HKD or RMB; (2) take such action as it considers necessary to adjust, amend or reverse any TSF FX Transaction (in whole or in part) in respect of which the Participant has failed to settle; and (3) impose an exception handling fee on the Participant as it considers appropriate. Further, HKSCC is entitled to take other additional actions in specific circumstances.
Participants are referred to section 12A.8.1 of the CCASS Operational Procedures for further details.
How are the HKD/RMB conversion rates for Stock Release Requests determined?The applicable conversion rates will be dependent on the time when Stock Release Requests are accepted by the TSF. If the requests are accepted by HKSCC at or before 12:00 noon on a trading day, the applicable conversion rate will be the RMB Buy Final FX Rate published by HKSCC at approximately 12:45 p.m. on that trading day. If the requests are accepted by HKSCC after 12:00 noon on a trading day, the applicable conversion rate will be the RMB Buy Final FX Rate published by HKSCC at approximately 4:45 p.m. on that trading day.
Overview
What is Swap Connect?Swap Connect is a new mutual access programme between Hong Kong and Mainland China interbank derivatives markets. The programme will begin with the Northbound channel of Swap Connect (“Northbound Swap Connect”), which aims to connect over-the-counter derivatives trading, clearing of eligible Northbound onshore CNY interest rate swap products (“Northbound Swaps”) between offshore investors and onshore dealers. The service is provided by three market infrastructure providers: China Foreign Exchange Trade System (“CFETS”), Shanghai Clearing House (“SHCH”) and OTC Clearing Hong Kong Limited (“OTC Clear”).
As per the Interim Measures for the Administration of Mutual Access between the Mainland and Hong Kong Interest Rate Swap Markets published by the People’s Bank of China (“PBOC”), the Southbound channel of Swap Connect is out of scope at the initial launch of the programme and the related rules will be separately formulated in due course.
What are the eligible products?Northbound Swap Connect will initially cover CNY Interest Rate Swaps (“IRS”) benchmarked to 7-day Repo (“FR007”), SHIBOR 3-Month (“Shibor 3M”), SHIBOR Overnight (“Shibor O/N”) and 1-year Loan Prime Rate (“LPR1Y”).
Who are the eligible participants?Onshore investors refer to onshore IRS dealers in the China Interbank Bond Market (“CIBM”) as set out in CFETS’ list of market makers. They would need to be both a participant of SHCH’s RMB interest rate swap centralised clearing service and a CFETS Swap Connect market maker.
Offshore investors refer to institutional investors from Hong Kong and other countries and regions who meet the relevant requirements of the PBOC, have been granted access to the CIBM (such as Bond Connect or CIBM Direct investors) and have obtained Northbound Swap Connect trading permission from CFETS. They would also need to be either an OTC Clear clearing member (“CM”) or a client of an OTC Clear CM.
What are the quotas for trading and clearing? How do they work?Daily trading and clearing quotas are set to limit the overall risk exposure of Swap Connect to a manageable level.
Effective 13 October 2025, the daily net notional trading quota for Northbound Swaps was increased to RMB 45 billion. CFETS monitors Northbound trades on a real-time basis and will suspend the acceptance of same direction trades once the net notional size has exceeded the daily trading quota. If the net notional size is lowered to a level below the quota before market close, trade acceptance will resume until the daily trading quota is exhausted again. The daily trading quota may be adjusted as and when appropriate based on market conditions in the future.
A clearing quota (i.e. total interoperable risk exposure limit) of RMB 4 billion is set by SHCH and OTC Clear at the initial stage of Swap Connect, with reference to market liquidity, default management and cost of funding. Trade novation will not proceed and the clearing request in respect to a trade will be rejected immediately if the additional risk exposure of net positions between SHCH and OTC Clear brought by such trade causes the clearing quota to be exceeded. The clearing quota could be adjusted based on the latest market condition and will be announced to public.
Are bilateral agreements required to participate in Northbound Swap Connect?Bilateral agreements are not a mandatory requirement to trade in Northbound Swap Connect, however investors can still enter into one based on their needs.
Examples of PBOC recognized agreements would include NAFMII master agreement, ISDA master agreement, Cleared Derivatives Execution Agreement (“CDEA agreement”), and the dedicated Swap Connect Cleared Derivatives Agreement (“Swap Connect Agreement”) which is jointly developed by NAFMII and HKEX.
Participants may refer to the following links for more information on the Swap Connect Agreement:
Clearing and Settlement
What are the clearing days and clearing hours?Northbound Swap Connect clearing days shall follow the trading calendar of the Mainland China interbank interest rate swap markets. Clearing hours will be from Beijing time 09:00 – 12:00 and 13:00 – 17:30.
How will Northbound Swaps be cleared by CCPs?Upon trades being matched and executed on CFETS, CFETS will send the clearing request to both SHCH and OTC Clear for clearing and novation on a real-time basis. SHCH will be the CCP to its clearing participants and OTC Clear will be the CCP to its CMs.
What is the settlement process in Northbound Swap Connect?OTC Clear will adopt the end-of-day Variation Margin on Northbound Swaps determined by SHCH based on the curve and day end prices constructed by SHCH on each Northbound Clearing Day. PAI and coupon calculated by SHCH will also be employed by OTC Clear for settlement. PAI will be calculated using SHIBOR overnight rate for Northbound Swaps.
CMs can refer to the settlement reports published by OTC Clear in OASIS at around 22:00 HKT for the settlement amount in RMB for Northbound Swaps value on the next Northbound Clearing Day.
End of day settlement obligations from Northbound Swaps will be netted with the existing settlement obligations. The CM is required to fulfil the settlement obligations with OTC Clear by 11:00 HKT, which is the same as existing practices. OTC Clear will pay CMs no later than 17:00 HKT for RMB settlements.
Risk Management
What is Inter-CCP Margin?The Inter-CCP Margin covers the loss arising from a CCP’s default (i.e. SHCH’s or OTC Clear’s default). The Inter-CCP Margin shall be sized on each Northbound Clearing Day based on the higher of the Inter-CCP Margin calculated by SHCH and OTC Clear. The Inter-CCP Margin Amount shall be contributed by SHCH and OTC Clear on a 50/50 basis.
How will each CCP manage the intraday exposure facing the other for new trades?Similar as current practice towards CMs, the CCP would jointly determine the intraday risk limit on each other based on funded resources and risk appetite. In an event that the intraday risk limit imposed by CCPs to each other is exceeded, or the relevant CMs’ collateral is insufficient, the new risk increasing trades might not be accepted for clearing on such clearing day. SHCH and OTC Clear will review the intraday risk limit on a regular and ad hoc basis, if the risk exposure of daily clearing volume is approaching or reaches the intraday risk limit.
Northbound Swap Connect Enhancements in May 2024
What is driving the implementation of new enhancements to Swap Connect products and services?Swap Connect has seen stable operations, steady increases in market participants and improving liquidity since its launch in May 2023.
However, some offshore investors have indicated that the absence of International Monetary Market (“IMM”) contract and trade unwinding solutions limit their participation in Swap Connect.
Commonly, offshore asset management firms use IMM contracts to manage their risk positions and asset allocation. Following such market feedback, IMM contracts will be introduced to Swap Connect.
For trade unwinding, OTC Clear will introduce backdated trade and compression services for Northbound Swap. Following the enhancement, Swap Connect participants can unwind their Northbound Swap position by executing a backdated trade and solo compression service.
These new product features and services further align China interest rate swap market standards with the international interest rate swap market.
What are the new product features and service for this enhancement?Starting from 20 May 2024, Northbound Swap Connect will be support the following product features / services:
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New Product Features / Services
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Details of changes
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Solo compression
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Allows Clearing Members to compress Northbound Swap trades with equal but opposite economics.
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Backdated trade (Includes upfront payment)
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Supports backdated Northbound Swap trades, if the coupon rate of the backdated trade deviates from market rate, upfront payment can be used to offset the market value. Through backdated trades, investors may offset their original trade and subsequently unwind the position through solo compression.
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IMM trade
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Supports the forward-start Northbound Swap with effective date, coupon payment date, maturity date on IMM dates, i.e. third Wednesday of March, June, September and December.
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Onshore dealers and offshore investors can check with the China Foreign Exchange Trade System (“CFETS”) and third-party trading platforms, respectively, for further details about the new product features.
What is the specification of upfront payment?CNY is the settlement currency of the upfront payment, settlement date is the trade date + one business day (T+1) and follows the trading calendar of the Mainland China interbank interest rate swap markets.
If a trade with an upfront payment is rejected and resubmitted on T+1, the settlement date of the upfront payment will be postponed to T+2, accordingly (T-day being equal to both trade date and the first rejection date).
What is the business day convention of an IMM trade?For the trade specification of a Swap Connect IMM trade, investors can refer to the Product Manual of Swap Connect from CFETS, or article 5.1 in Shanghai Clearing House (“SHCH”) Clearing Guidelines. There will be no holiday adjustment for the effective date of IMM Northbound Swap, whereas the payment and maturity dates will be adjusted by the “modified following” convention.
How can backdated trade and compression facilitate investors’ unwinding of cleared trades?Offshore investors can execute a backdated trade with the same trade economics, but different direction, as the original trade they intend to unwind, with one of the Northbound Swap Connect market makers.
Once the upfront payment of the backdated trade has been settled, offshore investors can raise the solo compression request to OTC Clear and compress the relevant transactions.
The offshore compression will be handled between offshore investors and OTC Clear, and there will be no impact to cleared transactions between the SHCH and onshore market makers.
Onshore participants can raise the compression request within the central clearing risk tolerance through CFETS and executed by SHCH.
Onshore compression and offshore compression will be executed separately. The Swap Connect offshore solo compression process is the same as the process applied to other standard rate derivatives products cleared at OTC Clear. For details, please refer to the OTC Clear Solo Compression User Guide.
What are the examples or use cases for offshore investors to participate in Swap Connect?Offshore investors can participate in Northbound Swap Connect to manage CNY interest rate risk exposure arising from their own investments or those of their affiliates in the China Interbank Bond Market, bond repurchases, and other financing activities such as loans and securities and futures investments.
Offshore investors can also hedge their CNY interest risk from relevant client transactions through Northbound Swap Connect. Offshore investors should have appropriate risk appetite identification capabilities, strong risk management awareness, sound risk management frameworks and detailed acknowledgements of corresponding investment risks.
Northbound Swap Connect Enhancements in 2025
What are the new product features introduced in this enhancement?Effective from 30 June 2025, the maximum tenor of Northbound Swap Connect referencing 7-day Repo and SHIBOR 3-month floating rate options, will be extended from 10 years to 30 years (inclusive).
Effective from 22 September 2025, a new floating rate options, 1 year Loan Prime Rate (“LPR1Y”), will be introduced for Northbound Swap Connect.
How can investors unwind a 30-year tenor trade?The unwinding process for a 30-year tenor trade is consistent with existing Swap Connect trades. Investors may perform solo compression by executing an equal and opposite trade that replicates the original trade’s future cash flows.
What is the Loan Prime Rate (LPR)?Based on the quotes made by quoting banks, by adding a few basis points to the interest rate of open market operations, the LPR is calculated by the National Interbank Funding Center (NIFC) and serving as the pricing reference for bank lending.
Quoting banks submit their quotes to the NIFC before 9:00 a.m. on the 20th day of every month (postponed in case of holidays), with a step length of 0.05 percentage points. The NIFC calculates the arithmetic average of rates after excluding the highest and lowest, and rounds the result to the nearest multiple of 0.05%. This final rate is published as the LPR at 9:00 a.m. on the same day. The public can access the rate via the websites of the NIFC and the PBOC.
What are the product features for the 1 Year Loan Prime Rate (LPR1Y) Northbound Swap?The LPR1Y Northbound Swap shares the same product features as the other floating rate options within Northbound Swap Connect, such as forward / backdated start date, standard / IMM roll convention and solo compression service. The discounting curve applied is LPR1Y, consistent with Shanghai Clearing house. While the LPR1Y itself has a 1-year index tenor, the reset and payment frequency is quarterly.
The LPR5Y is currently not available for clearing under Swap Connect until further notice.
General
What is HKEX Client Connect?
HKEX Client Connect (“Client Connect”) is a unified and secured web-based platform that will give all Clients (e.g. Exchange Participants, Clearing Participants, etc) direct access to a host of HKEX services, enhancing their overall user experience. Client Connect elevates the HKEX service offering to our Clients by digitizing the majority of paper-based services, building a centralized event enrolment platform and establishing an information corner through secured web-based interface made available via PC, tablet and mobile devices.
What are the main features of Client Connect?
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2-factor authentication (2nd password via email or mobile app)
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Accessible from PC/tablet/mobile
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Agile user account structure to support multiple memberships
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Customized service access based on the user access right
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Access to eServices which will replace current paper/fax based operations
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Built-in intelligence to auto-fill and validate the eService input
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Built-in workflow for maker-checker control
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Email/on-screen notifications of outstanding tasks
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Dashboard to show the outstanding and historical tasks with search and filter functions
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Electronic enrolment for seminars and events
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Centralized technical document download area
What is the service hours of Client Connect?Client Connect can be accessed 24 hours a day. There is a regular system maintenance from 08:00am on Saturday to 12:00am on Sunday. During the period, there will be no eService provided.
Although Client Connect can be accessed at any time, requests made outside working (or at specific) hours may not be processed until next business day. HKEX may also reject the request that is required to be submitted on a business day.
Can I login from outside Hong Kong?Yes. Please ensure your device has appropriate Internet connections and applications to obtain the One-Time-Password (OTP) and complete the 2-factor authentication.
How do I know if my account has been setup?Once an account is setup, user will receive notification in the email address used to setup the account. User should follow the instructions on the email by going to the Client Connect login page to setup its own password via self-service.
System requirement
What browsers does Client Connect support?Client Connect supports Google Chrome (version > 91), Mozilla Firefox (version > 50), Microsoft Edge (version > 100) in PC and Apple Safari 10.X on MacOS. When using mobile/tablet, Client Connect supports Apple Safari 10.X on iOS 10.X or any native Android browsers on Android 4.4 or above.
Security
What should I do if my account is locked?If you are a Client Connect Delegated Administrator (CCDA), you can request for unlock by sending an email to clearingps@hkex.com.hk
. The email address you use must be the same as your Client Connect login ID as a way of authenticating your identity.
If you are a Business user, your CCDA can unlock your account.
What is 2-factor authentication (2-FA)?The 2-FA is an enhanced security measure in Client Connect which introduces the use of One-Time-Password (OTP), serving as a 2nd layer of authentication method on top of login ID and password. Users can choose to obtain OTP via email or mobile application and they can change the channel to receive OTP in their profile settings afterwards.
Any security tips?For security reasons we recommend users to make use of the mobile App to obtain OTP.
Account Management
What can CCDAs and Business users do?CCDAs (setup by HKEX) can create new Business users, grant access rights to Business users by business functions and manage user status. CCDAs of HKSCC, HKCC & SEOCH participants and Designated Banks are also assigned with special Business rights for smartcard maintenance.
Business users (setup by CCDA) can access various business functions and applications based on user rights assigned by their CCDA and perform either the maker or checker functions.
All users are able to change and reset their password, switch channels to receive One-Time-Password (OTP) in their Profile settings.
Can a user act as both maker and checker role?A user can act as both maker and checker. However if a user acts as the maker of a request he/she cannot perform the checker role of the same request under the maker-checker mechanism.
eService
What is an eService?eService is an electronic form request available in Client Connect which replaces existing physical form. Built-in intelligence to auto-fill and online validation on the eService input will be available. Users can track the workflow and download the audit trail of all eService request in Client Connect.
Which eServices will not be available on Client Connect?
- Transaction related forms (e.g. trade, settlement, and collateral management) which will be handled by NextGen.
- Forms for back-up purpose if CCASS/DCASS Terminal is down
- Investor Participants’ forms
- Participantship termination related forms
- Forms used at Depository Counter
- Those where original form/supporting document are required
- Forms with low usage
Client Connect also acts as a repository storing non-digitized forms in PDF format for download.
Which eServices am I entitled to access?eService access of a Business user is determined by its access rights assigned by its own CCDA. Please refer to the Client Connect Delegated Administrator Rights Guidance Notes for details on the Business rights and corresponding eService accesses.
How are eServices located?eServices can be located through the navigation menu on the left or by entering keywords in the search box on top right corner of the dashboard. Only makers can search for blank eService forms, checkers can search for a submitted form by entering the request reference number or from dashboard.
What is the typical process of eService request on Client Connect?
A submitted eService request will go through an integrated maker-checker process. Checker can approve or revert/return the request back to submitter for modification. Approved request will go to next stage for processing. At the last step the request will become Approved/Completed. A PDF file of full audit trail will then be available for download.
Can I submit eService request on my mobile device?Technically a maker can submit an eService request on mobile device, however it may involve privacy issues if the eService requires file upload. Therefore, we would recommend maker to submit eService request via PC.
Can I modify submitted forms?You can only modify if the request has been reverted/returned to you by your checker, company in next step or HKEX. Forms discarded/withdrawn/rejected/aborted/completed/approved cannot be modified.
Which file types can be uploaded?Currently users can only upload PDF, XLS or XLSX files and there is a predefined file name format “Supporting Document_Ref_Xnnnnn_0X”
- “Supporting Document” is case sensitive with a space between
- “Ref” is the request reference number of the eService request
- “Xnnnnn” is the Participant ID where X is a character and n must be integer
- Suffix “_0X” is optional where X must be an integer
Support