HONG KONG MONETARY AUTHORITY Annual Report 1996
HONG KONG MONETARY AUTHORITY
Liquidity management measures under RTGS
Notwithstanding the availability of intraday repo facility, some banks were concerned about other banks holding on to liquidity until late in the afternoon and the risk of technical default of the time-critical payments to settle bulk clearing items. In response, the HKMA introduced the following measures to address these concerns:-
- Guideline on CHATS throughput: the guideline is designed to encourage all banks to make payments in a timely and orderly manner throughout the day. A bank is required to release and settle not less than 35% by noon and 65% by 2:30 pm the value of its total daily CHATS payments.
- Liquidity Adjustment Window (LAW): it is a contingent liquidity facility which allows banks to obtain intraday liquidity from the HKMA through repos of Liquidity Adjustment Facility (LAF) eligible securities other than Exchange Fund Bills and Notes. LAW is devised for the purpose of helping banks to settle the time-critical bulk clearing obligations including net settlement for stock market transactions, low-value bulk electronic payment items and cheques.
- Increased supply of Bills: to meet the banks' demand for more Exchange Fund Bills, the HKMA increased the supply of short-term Bills by increasing the issue and reserve amounts of 3-month and 6-month Exchange Fund Bills by a total of $13.5 bn; and issuing tap-issues of 28-day Exchange Fund Bills of a total issue size of $20 bn.
DEBT MARKET DEVELOPMENT IN HONG KONG
While the local debt market is still small compared with the banking sector and the stock market, it has developed into an important avenue for fund raising in recent years.The size of the market, as measured by the outstanding debt instruments issued by the public and private sectors, expanded by almost eightfold over the last five years from $37.8 bn at end-1991 to $281.4 bn at end-1996 (Table 2).