Hong Kong Financial Authority Confirms Launch of System for Cross-Forex Securities Transactons with Financial institution of Japan Monetary Community System

The Hong Kong Financial Authority (HKMA) has confirmed the launch of the delivery-versus-payment (DvP) hyperlink for cross-currency securities transactions between the Hong Kong greenback (HKD) CHATS and the Financial institution of Japan (BoJ) Monetary Community System.

These transactions wll reportedly contain Japanese Authorities Bond (BOJ-NET JGB) Companies.

As first reported by Fintech Information HK, the Clearing Home Automated Switch System (CHATS) is described as a real-time gross settlement (RTGS) system for finishing transactions in Hong Kong.

The hyperlink is predicted to help DvP settlement of the HKD sale and in addition the repurchase transactions with Japanese Authorities Bonds (JGB) serving as collateral. This might assst with eliminating settlement threat by supporting simultaneous or concurrent supply of HK {dollars} in Hong Kong and JGBs in Japan.

The DvP hyperlink, by providing a kind of settlement infrastructure, will help banking establishments in finishing up cross-currency repo transactions in an effort to purchase the HKD funds.

HKMA officers said that this sort of funding software may very well be fairly helpful, particularly throughout occasions of stress, as banks particularly worldwide establishments, would possibly mobilize their overseas foreign money debt securities to allow them to use them for transactions in Hong Kong.

The hyperlink is managed by the BoJ and by the Hong Kong Interbank Clearing Restricted (HKICL) in Hong Kong. The HKICL takes cares of the interbank clearing programs in Hong Kong, and is co-owned by the HKMA and the Hong Kong Affiliation of Banks.

The HKMA has been working many various initiatives to boost Hong Kong’s monetary companies sector.

As reported in January 2021, the HKMA had launched its Regtech Adoption Report for enhancing AML/CFT actions. The HKMA’s report identifies key alternatives that regulatory know-how or Regtech gives that may remodel or improve anti-money laundering and associated (combating the financing of terrorism) CFT efforts.

Total, the HMKA report notes that the adoption of Regtech options for AML/CFT is “typically extra mature than in another threat disciplines.” However concurrently, the HKMA is of the opinion there are vital alternatives for banks to additional undertake options in AML/CFT, and to discover new options as they emerge. The HKMA says it’s going to preserve Regtech as a key focus in its 2021 AML/CFT supervisory program.