HKD Clearing System in Hong Kong

Service Overview

To meet the international standards and minimize settlement risks, a HKD Real Time Gross Settlement (“RTGS”) system, which is known as HKD Clearing House Automated Transfer System (“CHATS”) was launched on 9 December 1996 by Hong Kong Interbank Clearing Limited (“HKICL”).

The RTGS system facilitates the settlement of real time Delivery versus Payment and real time Payment versus Payment through domestic and international linkages. All licensed banks in Hong Kong are obligated to maintain HKD settlement accounts with the Hong Kong Monetary Authority (“HKMA”). Since June 2000, restricted licence banks with a clear business need are also allowed to open settlement accounts with the HKMA. Under the RTGS system, every CHATS transaction has to be settled on an individual and gross basis. Unless with special instruction specified, payment instructions are settled immediately if there is sufficient balance in the settlement account. Banks without sufficient credit balances or securities for intraday repo to effect outgoing payment instructions will have their instructions queued in the system. The queuing mechanism allows the banks to manage their own queues of payment instructions through cancellation or re-sequencing. When a payment has been settled across the books of the HKMA, it will be regarded as final and irrevocable.


While no daylight overdraft is allowed, banks may obtain intraday liquidity through intraday repurchase (repo) with the HKMA, using mainly government paper, e.g. Exchange Fund Bills and Notes. Intraday repo that fails to be reversed before the close of the business day will be carried into overnight borrowing through the Discount Window.


To access RTGS system functions, banks must connect to the SWIFT network to initiate/receive payment instructions, and access eMBT provided by HKICL for performing administrative functions to respective payment instructions.