Hong Kong Exchanges & Clearing Ltd. · HKEX:388
Hong Kong Exchanges & Clearing — STMC webinar (June 2024)
27 slides from Hong Kong Exchanges & Clearing's conference presentation, June 2024
Slide 1: Enhancement of Settlement Arrangement for Multi-counter Eligible Securities
Enhancement of Settlement Arrangement for Multi-counter Eligible Securities June 2024
Slide 2: Disclaimer
Disclaimer The information contained in this presentation is for general informational purposes only and does not constitute an offer, solicitation, invitation or recommendation to subscribe for or purchase any securities or other products or to provide any investment advice of any kind. This presen
Slide 3: Agenda
Agenda 01 | Background 02 | Post Trade Arrangements 03 | Trading Arrangements 04 | Market Data Arrangements 05 | Timeline 06 | Appendix 07 | Q&A 3
Slide 4: 01 | Background
01 | Background
Slide 5: Background – Evolution of Multi-counter Trading from 2011 to 2025
01 | Background – Evolution of Multi-counter Trading from 2011 to 2025 Exchange Product Launch of Dual Tranche Dual Counter Launch of HKD-RMB Dual Counter Model Introduced the Dual Tranche Launch of Launch of • Developed a HKD-RMB Dual Counter mechanism for Dual Counter (DTDC) – existing HKD counter
Slide 6: Background – Growth of Multi-counter Eligible Securities
01 | Background – Growth of Multi-counter Eligible Securities Billion There is an imminent need for HKEX to improve the scalability of Multi-counter Eligible Securities 6
Slide 7: Background – Key Scope of the Enhancement
01 | Background – Key Scope of the Enhancement 1 Reflect all 1 Stock No post trade activities in realignment Fully fungible code Per More 1 security international scalable Stock code standard Multi-counter Eligible Securities Examples: Dual Counter Securities Multi-counter ETPs Trading counters: HKD
Slide 8: 02 | Post Trade Arrangement
02 | Post Trade Arrangement
Slide 9: Post Trade Arrangements – Overview of Enhanced Settlement Arrangement
02 | Post Trade Arrangements – Overview of Enhanced Settlement Arrangement Single Tranche Multiple Counter Approach Register of Member One security* *Fungible security – same stock code for Depository Holdings One security* settlement Trading RMB counter USD counter HKD counter Securities Settlement
Slide 10: Post Trade Arrangements – Clearing and Settlement Flow
02 | Post Trade Arrangements – Clearing and Settlement Flow Domain Settlement Other Currency Counter Counter Reflect as domain settlement 388 80388 counter right after trade execution Trading Clearing (388/80388) (388 only) T-day T+1 T+2 Trade amendment/cancellation Trading counters PCS* FCS* Securi
Slide 11: Post Trade Arrangements – Clearing and Settlement Arrangement
02 | Post Trade Arrangements – Clearing and Settlement Arrangement Existing Arrangement Enhanced Arrangement • Settlement for different currency counters are • Settlement will be done through domain settlement done separately as independent stocks with counter with one stock code only. No inter-coun
Slide 12: New Settlement Process – Same Stock Netting
02 | Post Trade Arrangements – New Settlement Process – Same Stock Netting Begin of day settlement Cross Same day stock 1st BSR 2nd BSR 3rd BSR Final BSR netting netting Purpose of ‘same stock netting’: It helps to maximize the settlement efficiency of Multi-counter Eligible Securities. Netting algo
Slide 13: New Settlement Process – Same Stock Netting (Illustrative Example)
02 | Post Trade Arrangements – New Settlement Process – Same Stock Netting Illustrative example: Scenario 1 Scenario 2 Scenario 3 (Long Position > Short position) (Short Position > Long Position) (Short Position > Long Position) With overdue positions b/f Stock 388 388 388 388 388 388 388 388 388 Se
Slide 14: New Money Settlement Arrangement – Receipt after Payment
02 | Post Trade Arrangements – New Money Settlement Arrangement – Receipt after Payment This payment arrangement will apply to CP who has a credit and a debit money obligation in different currencies resulted from same stock netting. Evening MSI processing window 16:05 MSI file to HKICL Reject DCI i
Slide 15: Post Trade Arrangements – Depository and Nominee Services
02 | Post Trade Arrangements – Depository and Nominee Services Services Existing Arrangement Enhanced Arrangement Rights for entitlements Same rights for entitlements and options (if applicable) and options • Separate submission of nominee • Submission of nominee instructions, such as Corporate Acti
Slide 16: Post Trade Arrangements – Risk Management Arrangement
02 | Post Trade Arrangements – Risk Management Arrangement Arrangement Existing Arrangement Enhanced Arrangement Combined Position Separate (with FX and haircut where applicable) Risk Parameters Respective Counter Risk Calculation Counter (HKD) Marks & margin In HKD on portfolio basis Calculation (b
Slide 17: 03 | Trading Arrangements
03 | Trading Arrangements
Slide 18: Trading Arrangements - Stock Code, Stock Short Name and ISIN Arrangements
03 | Trading Arrangements - Stock Code, Stock Short Name and International Securities Identification Number (ISIN) Arrangements Stock Codes & Stock Short Names ISIN • Two separate stock codes (counters) for trading • Only one ISIN will be recognized for post queue purpose trade activities in CCASS.
Slide 19: Trading Arrangements – Checklist for EP Readiness
03 | Trading Arrangements – Checklist for EP Readiness Order Placing Pre-trade checking ascertain which counter evaluate if system (RMB or HKD or USD) modification is required that a client places (e.g. refer to single holdings for pre-trade EPs are advised to review their systems orders checking) a
Slide 20: 04 | Market Data Arrangements
04 | Market Data Arrangements
Slide 21: Market Data Arrangements - Real Time Market Data Dissemination in OMD-C and MMDH
04 | Market Data Arrangements - Real Time Market Data Dissemination in OMD-C and MMDH Reference Data Order Book, Trade & Price and Statistics Data • Security Definition (11) message in OMD-C and • Separate stock codes (counters) for market MMDH is currently published for each individual data dissemi
Slide 22: 05 | Timeline
05 | Timeline
Slide 23: Timeline
05 | Timeline 1H 2025 Migration 1H 2025 Practice session 2H 2024 System development May 2024 Technical specification issued The business launch of the Enhancement is subject to regulatory approval and market readiness. HKEX will notify the market in due course. 23
Slide 24: 06 | Appendix
06 | Appendix
Slide 25: Appendix – Checklist for CPs readiness
06 | Appendix – Checklist for CPs readiness (For reference only) Study and understand the clearing and settlement arrangement under the Enhancement Aware of all post trade activities for Multi-counter Eligible Securities will be reflected under domain settlement counter in CCASS immediately after tr
Slide 26: Appendix – Information
06 | Appendix – Information Latest updates and reference documents can be found on: 26
Slide 27: Q&A / Thank you
Q&A / Thank you Please contact the CCASS Hotline at 2979-7111 or email to clearingps@hkex.com.hk 27
Hong Kong Exchanges and Clearing — STMC webinar (June 2024) on 6ix