Clearing Infrastructure of Hong Kongs Securities and Derivatives Market

1
Clearing Infrastructure of Hong Kongs
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 Futures HKATS AS/400
Derivatives Trading Integration (2001)
Trading Clearing Securities AMS/3 CCASS Stock
Options HKATS TOPS Futures HKATS AS/400
Derivatives Clearing Integration (2002)
Trading Clearing Securities AMS/3 CCASS Stock
Options Futures HKATS DCASS
4
Clearing Infrastructure for Future
Market Infrastructure

• CCASS for Securities
• DCASS for Derivatives
• Common Risk Management System (CRMS)
• Common Collateral Management System (CCMS)

5
Cash Market Participants
GSTPA
SWIFT
Common Gateway
Internet
Common Access Point
Third party Interfaces
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
CCASS Upgrade Project (CCASS/3) Features
Market Infrastructure

• 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
CCASS Upgrade Project (CCASS/3) Features
Market Infrastructure

• Functional Architecture Upgrade
• Multi-Market Structure
• Variable Settlement Cycles (Tx)
• Extended Trading Hours

8
Single Derivatives Clearing and Settlement System
(DCASS)
Market Infrastructure

• 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 (contd)

• 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