Debt Securities Settlement System

Central Moneymarkets Unit

The Central Moneymarkets Unit (CMU) was established in 1990 to provide computerised clearing and settlement facilities for Exchange Fund Bills and Notes. In December 1993, the HKMA extended the service to other Hong Kong dollar debt securities. The CMU offers an efficient, safe and convenient clearing and custodian system for Hong Kong dollar debt instruments. Since December 1994, the CMU has been linked with other regional and international systems. This helps promote Hong Kong dollar debt securities to overseas investors who can use the links to participate in the Hong Kong dollar debt market.

The CMU service was further extended to non-Hong Kong dollar debt securities in January 1996. In December 1996, a seamless interface between the CMU and the Hong Kong dollar RTGS interbank payment system was established. This enables the CMU system to provide real-time and end-of-day Delivery versus Payment (DvP) services to its members. The CMU was further linked to the US dollar, euro and Renminbi RTGS systems in December 2000, April 2003 and March 2006 respectively to provide real time DvP capability for debt securities, and also intraday and overnight repo facilities for the US dollar, euro and Renminbi payment systems in Hong Kong.

Main Scope of Services

In addition to providing CMU members with securities transfer services, the CMU offers the following services:

  • Collateral Management System
    • Automatic Repo Facility (both intraday and overnight) in Hong Kong dollar, US dollar, euro and renminbi
  • Securities Lending Service
    • Securities Lending Programme for debt securities issued by the private sector
  • Market Making Arrangement for Exchange Fund Bills and Notes
  • Issuance Programme for Exchange Fund Bills and Notes
  • Arranger, custodian, agent and operator of notes issued by HKSAR Government
  • Real time DvP for all CMU securities denominated in Hong Kong dollar, US dollar, euro and renminbi
  • Cross-border DvP Settlement via regional central securities depositories (CSDs) and international central securities depositories (ICSDs)
  • Other custodial services
    • Paying agent
    • Securities lodgement
    • Allotment by tendering
  • Corporate action service
  • Bank-to-bank repo service
  • Fund order routing and settlement service

Settlement Finality

The settlement of transactions made through the CMU system is final and irrevocable. This finality is protected from insolvency laws and other laws by the Payment Systems and Stored Value Facilities Ordinance.

Using Exchange Fund Bills/Notes as Margin Collateral for Trading of Stock Options and Futures

In order to assist liquidity management by market participants in the stock options and futures exchange, the CMU has developed infrastructure to enable the SEHK Options Clearing House Limited and the Hong Kong Futures Exchange Clearing Corporation Limited to use Exchange Fund paper as common margin collateral for the trading of stock options and futures. With the approval of the HKMA, the SEHK Options Clearing House Limited and the Hong Kong Futures Exchange Clearing Corporation Limited became Recognised Dealers of Exchange Fund paper in March 1999.

CMU Bond Price Bulletin

Pursuant to the recommendations of the Review on Financial Infrastructure Development conducted by the HKMA in 2005 under the guidance of the Financial Infrastructure Sub-Committee (later renamed as Financial Infrastructure and Market Development Sub-Committee) of the Exchange Fund Advisory Committee, the CMU has developed a CMU Bond Price Bulletin to provide retail investors with convenient on-line access to indicative bond prices quoted by individual financial institutions in Hong Kong. Launched in January 2006, the Bulletin helps promote the retail bond market in Hong Kong. It improves retail investors' access to the secondary bond market, by providing price and other information on bond products available in the market which raise product awareness and improve price transparency.

Electronic Trading Platform

Launched in December 2007, the Electronic Trading Platform is one of the recommendations arising from the Review of Debt Market Development completed by the HKMA in 2006. The Platform provides the necessary infrastructure to support electronic trading of the Exchange Fund Bills and Notes and can be extended to cover other bonds and financial instruments available in the market. The Platform increases the price transparency among the market players and streamlines the trading process. Market players can identify their trade counterparties and conclude deals more efficiently. Overseas as well as local market players are encouraged to use this platform to trade bonds and other financial instruments issued in Hong Kong.

CMU Fund Order Routing and Settlement Service

Launched in August 2009, the CMU Fund Order Routing and Settlement Service provides CMU Members, who may also be investment fund distributors, custodians, managers and institutional investors in Hong Kong and the region, with a standardised platform for processing investment fund transactions. The scope of operation of the service includes:

  • handling of investment funds subscription, redemption and switching orders
  • generation of corresponding confirmation and payment instructions
  • provision of regular reports
  • provision of investment funds custodian service

Disclosure Framework for CMU System

The Committee on Payments and Market Infrastructures (CPMI) (formerly known as Committee on Payments and Settlement Systems (CPSS)) of the Bank for International Settlements and the International Organization of Securities Commissions (IOSCO) jointly issued a disclosure framework and assessment methodology in April 2012 for their principles for financial market infrastructures (PFMIs), which is the latest international standards for financial market infrastructures (FMIs).

The disclosure framework (DF) is intended to promote consistent and comprehensive public disclosure by FMIs in line with the requirements of the PFMIs. The CMU is subject to the DF, and the disclosure report of the CMU is completed according to the disclosure template outlined in the DF.

RMB Sovereign Bonds and PBoC Bill Issuances via CMU Tendering Platform

Besides providing clearing and settlement services for secondary market debt securities transactions, the CMU also provides a tendering platform for issuers to issue debt securities in Hong Kong through tendering.  In November 2011, the Ministry of Finance (MoF) issued RMB sovereign bonds in Hong Kong using CMU’s tendering platform for the first time.  Since then, MoF has been using this CMU service every year for its RMB sovereign bond issuances in Hong Kong.  Starting from November 2018, the People’s Bank of China (PBoC) also made use of CMU’s tendering platform for the issuance of PBoC bills in Hong Kong.

Last revision date : 14 October 2019