Hong Kong Monetary Authority (HKMA) will spare no effort in helping Hong Kong maintain its competitive edge in financial infrastructure.

In his latest Viewpoint column on the authority's website, HKMA Chief Executive Jeseph Yam said the enactment of the Clearing Settlement Systems Ordinance on July 2 will provide the authority the foundation needed to take forward this important task.

Yam noted that the new legislation will also facilitate the admission of the Hong Kong dollar into the Continuous Linked Settlement (CSL) system -- a global clearing and settlement system for cross-border foreign-exchange transactions.

Many major international currencies have already been admitted to the system, including the US dollar, euro, Japanese yen, pound sterling, and Swiss franc.

"As in other jurisdictions, the CLS system requires, as a pre-condition for entry, that the laws of Hong Kong provide for settlement finality for both transactions through the CLS and the underlying real time gross settlement (RTGS) system in Hong Kong,"he wrote.

Before the enactment of the ordinance, there were no explicit legal provisions in Hong Kong for the oversight of CSL systems such as the RTGS systems for the Hong Kong dollar, US dollar and euro.

The authority's de facto oversight role was derived from a number of sources, for example through the authority's role as the settlement institution for the Hong Kong dollar RTGS system, the authority's shareholding in the Hong Kong Interbank Clearing Limited, and through contractual relationships with certain clearing and settlement system operators.

Source: Xinhua