Banks, HKMA give approval to RTGS system

The Hong Kong Monetary Authority (HKMA) and the banking industry are satisfied with the progress of the real time gross settlement (RTGS) system launched last month.

The system, whose introduction caused concern in the industry, changes interbank settlement from a net and daily basis to a real time gross settlement basis.

HKMA chief executive Joseph Yam Chi-kwong said the system was running smoothly, although there had been some minor problems.

'There was one large deal which needed 45 minutes to settle, it was too long,' he said.

He said the delay was due to relatively inexperienced and temporary staff at some banks.

The system coped well on Monday when interbank trading turnover reached $512 billion, compared with a typical trading day of $300 billion to $400 billion.

Jack Cheung, of HSBC Markets, said the system had run smoothly during the past month.

He said the large turnover on Monday was due to the New Year and active trading on the stock market.

He said there was frequent use of the repurchase, or repo, agreement contracts, through which banks can use their Exchange Fund bills and bonds as collateral for short-term, interest-free funding from the HKMA.

Andrew Fung, treasurer of the Commonwealth Bank of Australia, said the RTGS system was operating well.

He said the market still needed short-term bills to prepare for the repo arrangement and he hoped the HKMA would continue to launch the one-month bills tender. The one-month bills tender is a special measure to help banks secure sufficient short-term bills for repos.