Citibank Given Clearing Job by HKMA

The Hong Kong Monetary Authority (HKMA) announced today that the Central Moneymarkets Unit (CMU), a central custodian and clearing system for debt instruments operated by the HKMA, will introduce a new clearing, settlement and custodian service for US Treasuries. The

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The Hong Kong Monetary Authority (HKMA) announced today that the Central Moneymarkets Unit (CMU), a central custodian and clearing system for debt instruments operated by the HKMA, will introduce a new clearing, settlement and custodian service for US Treasuries. The new service will enable investors in Hong Kong and other parts of Asia to settle US Treasuries during Hong Kong hours through the CMU.

This new service will commence in the fourth quarter of 2002. The HKMA has appointed Citibank as its custodian for custody of US Treasuries on behalf of the CMU. This provides an indirect link to the Fedwire Book-Entry Securities Transfer System, a clearing and settlement system for US Treasuries operated by the Federal Reserve Bank of New York in the United States. Citibank will also be responsible for providing settlement, income collection, redemption and tax-related services to the CMU.

With the existing system interface between the CMU and the US dollar clearing system in Hong Kong, investors can clear and settle US Treasuries on a real-time delivery versus payment (DvP) basis during Hong Kong hours through the accounts maintained by CMU members with the CMU. This arrangement will bring forward the DvP settlement of the US Treasuries from New York to Hong Kong time and shorten the settlement cycle, thus enhancing the settlement efficiency and reducing the settlement risk of US Treasuries transactions conducted by Asian market participants.

“The clearing of US Treasuries in Hong Kong would enhance the ability of investors in the region to manage their US dollar liquidity more effectively and with better risk management. This new service from the CMU is part of the on-going effort of the HKMA to provide a robust, efficient and up-to-date financial infrastructure to serve the investor community in Asia. Hopefully this new service will attract more business to Hong Kong and strengthen its role in securities settlement in the region.” said Mr Tony Latter, Deputy Chief Executive of the HKMA.

“We are proud to be appointed as the custodian of US Treasuries for the CMU, which is the latest of the HKMA’s effort to strengthen Hong Kong’s position as the pre-eminent financial center in Asia,” said Mr T C Chan, Country Corporate Officer of Citibank Hong Kong. “As a leading custodian bank in Asia, Citibank is dedicated to providing the unique services that only a global bank of our scale can offer.”

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