Service Overview
CLG is a service provided to all members of the Hong Kong Association of Banks (“HKAB”) i.e. licensed banks in Hong Kong, for the clearing of interbank paper instruments in HKD, USD and RMB received from their customers. Paper instruments include cheques, demand drafts, cashier's orders and remittance advices, etc. (collectively referred as “Cheques”).
Cheques presented to Hong Kong Interbank Clearing Limited (“HKICL”) on Day D are sorted and dispatched to drawee banks overnight. The drawee banks would process the Cheques, and return unpaid items to HKICL on the next business day (Day D+1). The interbank settlement will be executed on Day D+1 on a batch run basis except those items which are cleared on Friday will be settled on Monday morning. Cheques are settled after netting the unpaid items in order to eliminate the settlement risk related to the unpaid items.
For the purposes of facilitating economic exchanges and cooperation, HKICL and Shenzhen Financial Electronic Settlement Centre Co., Ltd (“SZFESC”) jointly launched HKD, USD and RMB Cheque clearing service between Shenzhen and Hong Kong. The HKD, USD and RMB Cheques are cleared through HKICL and SZFESC on Day D, and settled on Day D+1.
HKICL also launched the HKD and USD Cheque clearing service between Macau and Hong Kong. The HKD and USD Cheques are cleared on Day D and settled on Day D+1.
With the support of the HKMA, HKAB commissioned HKICL to implement the Cheque Imaging and Truncation System (“CITS”) on an industry-wide basis, which was launched on 21 June 2003. Currently, cheques are exchanged and cleared on the basis of electronic presentation of cheque images and the relevant cheque data. This mitigates the need for banks to deliver physical cheques for clearing and settlement.
In order to obviate the need for banks to make physical presentment of cheques for clearing, the Bills of Exchange Ordinance was amended to allow banks to present the electronic image of the cheques for payment.