The HKMA has established co-operative oversight arrangements with relevant authorities both at domestic and international level in accordance with Responsibility E under Principles for Financial Market Infrastructures. The co-operative oversight arrangements serve to foster efficient and effective communication and consultation in order to support each other in fulfilling their respective mandates with respect to FMIs.
The HKMA and the Securities and Futures Commission (SFC) are the overseers of FMIs under their respective jurisdictions pursuant to the Ordinance and the Securities and Futures Ordinance (SFO) respectively. As there are cases where an FMI overseen by the SFC may also be a participant of an FMI overseen by the HKMA, or vice versa, to avoid the possibility of introducing any incompatible regulatory requirements, the HKMA and the SFC have entered into a memorandum of understanding (MOU) in November 2004 to set out the co-operative oversight arrangements between the two regulators, including the arrangements for mutual consultation. The MOU was further updated in September 2019 taking into account developments since 2004 to further strengthen the cooperative oversight arrangements between the two regulators.
Continuous Linked Settlement System (CLS)
The MA designated and granted a certificate of finality to CLS under the Ordinance. CLS Bank is regulated and supervised by the US Federal Reserve as an Edge corporation. The HKMA participates in the co-operative oversight arrangements of the CLS and is a member of the CLS Oversight Committee (OC). The co-operative oversight arrangement is specified in the Protocol for the Cooperative Oversight Arrangement of CLS signed by the central banks/monetary authorities overseeing the CLS, including the HKMA. The HKMA will use the information obtained from the OC, among other things, to consider whether the CLS continues to meet the requirements under the Ordinance.
Cross-border Links Established with Financial Market Infrastructures outside Hong Kong
The HKMA co-operates with overseas authorities in the oversight of cross-border links established between FMIs in Hong Kong and those in overseas jurisdictions. Appropriate co-operative oversight frameworks are established to assist authorities in both jurisdictions to discharge their oversight functions.
SWIFT is a global messaging network which allows financial institutions to transmit information and instructions in a standardised manner. In Hong Kong, many financial institutions including banks and FMIs (including CHATS and CMU) are running on SWIFT platforms to exchange financial instructions and messages.
Given the common use of SWIFT by financial institutions and FMIs around the globe and the system interdependencies so entailed, any disruptions in SWIFT’s services may give rise to systemic implication. To this end, the HKMA participates in the SWIFT Oversight Forum, which comprises senior overseers from major central banks, to share SWIFT-related information and discuss SWIFT oversight issues, including cyber security matters and customer security framework.