The Hong Kong Monetary Authority has been urged to open the real-time gross settlement system to some members of the Association for Restricted Licence Banks and Deposit-taking Companies. The system, which began in December last year, is open only to 182 full-licence banks. Martin Lancaster, the association's convenor for banking systems sub-committee, said rules which barred restricted-licence banks from the system put them at a disadvantage. He said many investment and private banks fell into the restricted licence category. The size of their Hong Kong dollar payment volumes could at times surpass those of some of the full licence banks, he said. Admitting them to the system could reduce risks inherent in their local currency payment transactions and enable them to provide better service to customers. The 190 members of the association were asked for their opinions on joining the system after a March meeting with authority officials. The results revealed restricted-licence banks, which comprise most major investment banks, trustee banks and merchant banks in the territory, were keen to join the system. They envisage substantial growth in the Hong Kong dollar payment and receipt market in the next 18 months after the Mandatory Provident Fund is set up. They also see investment in China growing, with funds channelled through Hong Kong. 'In those cases, barred access to the payment system will pose a major disadvantage for us when we are to compete with full-licence banks,' Mr Lancaster said. This disadvantage would also be felt when the United States Federal Reserve Board expanded operating hours at its Fedwire interbank fund-transfer service to Asian trading time this year. The new operating hours overlap afternoon trading in Hong Kong and allow simultaneous settlement in both markets in different currencies, removing settlement risk. Only full-licence banks are able to benefit from this risk-reducing development.