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U.S. dollar clearing system in H.K. to be launched in Aug.

HONG KONG, March 9 Kyodo

The Hong Kong Monetary Authority (HKMA) said Thursday a new U.S. dollar clearing system in the territory will be launched in phases from August, and appointed the HSBC banking group as the settlement institution.

"The U.S. dollar clearing system is important in developing Hong Kong's infrastructure as an international financial center," Joseph Yam, chief executive of the quasi-central bank HKMA, said at a signing ceremony of the appointment.

The new system will help develop U.S. dollar-denominated equity and debt markets in Hong Kong as well as attracting the leading international currency trades in Asian time to be settled in the territory, Yam said.

Settlement efficiency and settlement risk will also be improved, he added.

The development of a multi-currency clearing system is one of Hong Kong's initiatives to gain from the trend to globalization.

Under the appointment, HSBC will act as the settlement institution with a franchise of five years.

The commercial bank, in turn, will appoint Hong Kong Interbank Clearing Ltd., the operator of the Hong Kong dollar payment system, as its clearing agent.

Based on an interbank real time gross settlement system, the new U.S. dollar clearing system will begin bulk clearing for stock market transactions in August.

Foreign exchange settlement will be implemented in September, while U.S. dollar paper check and debt clearing will be started in December.

The HKMA believes the new clearing system will give support to the Growth Enterprise Market, the "secondboard" exchange in Hong Kong, which will allow listed shares to be denominated and settled in U.S. dollars.

Following the U.S. dollar system, a euro-denominated capital market will be the next target of development.

On Wednesday, in unveiling the new fiscal budget, Financial Secretary Donald Tsang said a multi-currency clearing system will make Hong Kong "the leading investment window in Asia."
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Publication:Asian Economic News
Date:Mar 13, 2000
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