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Clearing Infrastructure of Hong Kong’s Securities and Derivatives Market

Clearing Infrastructure of Hong Kong’s Securities and Derivatives Market. Mr KC Kwong Chief Executive Hong Kong Exchanges and Clearing Limited 1 June 2001 Hong Kong Securities Institute Luncheon. Demutualisation & Merger. HKEx Corporate Structure. HKEx. Securities Markets.

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Clearing Infrastructure of Hong Kong’s Securities and Derivatives Market

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  1. Clearing Infrastructure of Hong Kong’s Securities andDerivatives Market Mr KC Kwong Chief Executive Hong Kong Exchanges and Clearing Limited 1 June 2001 Hong Kong Securities Institute Luncheon

  2. Demutualisation & Merger HKEx Corporate Structure HKEx Securities Markets Derivatives Markets Futures Stock Options Trading SEHK HKFE SEHK Clearing HKSCC HKCC SEOCH

  3. Market Infrastructure Post Merger Systems Infrastructure Trading Clearing Securities AMS/3 CCASS Stock Options TOPS TOPS FuturesHKATS AS/400 Derivatives Trading Integration (2001) Trading Clearing Securities AMS/3 CCASS Stock Options HKATS TOPS FuturesHKATS AS/400 Derivatives Clearing Integration (2002) Trading Clearing Securities AMS/3 CCASS Stock Options & Futures HKATS DCASS

  4. Market Infrastructure Clearing Infrastructure for Future • CCASS for Securities • DCASS for Derivatives • Common Risk Management System (CRMS) • Common Collateral Management System (CCMS)

  5. Cash Market Participants GSTPA SWIFT Third party Interfaces Common Gateway Common Access Point Internet Derivatives Market Participants Overseas Participants Vision of Common Access and Network Open Messages Standard API based Thin Client / Browser Based FinNet AMS/3 HKATS – OM CLICK • CCASS/3 • Technical Architecture • - Open Connectivity • - De-coupled Subsystems • Functional Architecture • - Multiple Market Infrastructure • - Extended Operation Hours • - Flexible Settlement Operations DCASS – OM SECUR RMS/S RMS/D CRMS Systems Overview CCMS Common Risk Management And Collateral Management Payment System

  6. Market Infrastructure CCASS Upgrade Project (CCASS/3) Features Technical Architecture Upgrade • Database Segmentation • Middle-Tier • User Access Options • Browser • API • SWIFT (GSTPA) • Message Based Data Flow • ISO 15022 Compliance • New CCASS Network (FinNet)

  7. Market Infrastructure CCASS Upgrade Project (CCASS/3) Features Functional Architecture Upgrade • Multi-Market Structure • Variable Settlement Cycles (T+x) • Extended Trading Hours

  8. Market Infrastructure Single Derivatives Clearing and Settlement System (DCASS) • Integrated Clearing System for Futures and Stock Options • A Seamless Trading and Clearing Derivatives Platform • OM SECUR – Clearing • OM Click - Trading

  9. Common Risk Management System • Integrated Risk Profiles • Cross Product Assessment • Cross Participants Analysis • Real-Time Monitoring

  10. Common Collateral Management System • Common Collateral Pool • Multi-Currency Cash • Non-Cash Securities

  11. Benefits to Market • Enhanced market infrastructure • More flexible system architecture • Convergence with international standards • Better and integrated risk management • Better support for product and market developments

  12. Benefits to Market (cont’d) • Facilitate strategic alliance with major international financial centres • Increase investment product variety • Improve system and operational efficiency • Improve risk management • Support future major market initiatives

  13. Benefits to Market Participants • Reduce operating costs • Increase back office efficiency • Enhance risk management through real time access to information • More business opportunities

  14. Key Milestones • All projects to complete by second quarter of 2002 • Street-wide tests for different systems between end 2001 and mid 2002. • First market briefings in June 2001.

  15. Conclusion Q & A

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