Clearing and Settlement Systems Ordinance

The Clearing and Settlement Systems Ordinance was passed by the Legislative Council today (Friday).

The Ordinance establishes a statutory regime for the Monetary Authority (MA) to designate and oversee clearing and settlement systems which are material to the monetary or financial stability of Hong Kong or to the functioning of Hong Kong as an international financial centre. The Ordinance also provides statutory backing to the settlement finality of those transactions effected through such designated systems by protecting the settlement finality from insolvency laws or any other laws. To this end, the MA will issue a certificate of finality to those designated systems meeting the safety and efficiency requirements specified in the Ordinance.

The Ordinance also paves the way for the admission of Hong Kong dollar into the Continuous Linked Settlement (CLS) System, a global clearing and settlement system for cross-border foreign exchange transactions. Admission will enable the foreign exchange transactions involving Hong Kong dollar to be settled in a global clearing and settlement system.

"The new legislation will further strengthen the financial infrastructure in Hong Kong by providing legal certainty to transactions cleared and settled through designated systems. Under the Ordinance, the HKMA will perform its role as an overseer of designated systems to ensure that these systems are operated in a safe and efficient manner. This will ensure that the designated systems are sufficiently robust in supporting the domestic and cross-border financial activities in Hong Kong," said Mr Joseph Yam, the Chief Executive of the Hong Kong Monetary Authority.

For further enquiries, please contact:

Jasmin Fung, Manager (Press), at 2878 8246 or
Thomas Chan, Senior Manager (Press), at 2878 1480

Hong Kong Monetary Authority
2 July 2004