Cheque Clearing

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, according to:

 

(a) the Memorandum of Understanding between the Hong Kong Monetary Authority (“HKMA”) and the People's Bank of China Shenzhen Central Sub-branch on Hong Kong/Shenzhen Joint Clearing for Hong Kong Dollar Cheques, and

 

(b) the Memorandum of Understanding between the HKMA and the People's Bank of China Guangzhou Branch on Hong  Kong/Guangdong Province(excluding Shenzhen) Joint Clearing for Hong Kong Dollar Cheques

 

HKICL, Shenzhen Financial Electronic Settlement Centre Co., Ltd (“SZFESC”) and Guangzhou Electronic Banking Settlement Centre (“GEBSC”) jointly launched a service of HKD Cheque clearing between Guangdong Province (including Shenzhen) and Hong Kong. Both the HKD Cheques drawn on banks in Hong Kong, and presented to banks in Guangdong Province (including Shenzhen) (launched in January 1998 for Shenzhen and October 2000 for Guangdong Province), and the HKD Cheques drawn on banks in Guangdong Province (including Shenzhen) and presented to banks in Hong Kong (launched in June 2002) are cleared through HKICL, GEBSC and SZFESC on Day D, and settled on Day D+1.

 

In July 2004, the HKMA and People's Bank of China Shenzhen Central Sub-branch agreed to extend the cross-border Cheque clearing between Hong Kong and Shenzhen to USD Cheques modeling on the existing HKD counterpart to improve efficiency of clearing and settlement of USD Cheques drawn on banks in Shenzhen and presented to banks in Hong Kong. The Hong Kong/Shenzhen joint clearing for USD Cheque was launched in July 2004.

 

The joint Cheque clearing service is further expanded to cover RMB Cheques drawn on banks in Hong Kong and presented to banks in Guangdong Province (including Shenzhen) in March 2006.

 

In August 2007 and June 2008 respectively, the cross-border HKD and USD Cheque clearing has been further expanded to cover Macau whereby HKD and USD Cheques drawn on banks in Hong Kong and presented to banks in Macau 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. With the CITS, low-value 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 low-value cheques for clearing and settlement. The high value cheques and special items (such as suspicious cheques) regardless of value are still physically presented together with their images to the paying banks.

 

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. To this effect, the Bills of Exchange (Amendment) Ordinance 2003 was gazetted and enacted on 28 March 2003.