Central Moneymarkets Unit OTC Derivatives Trade · PDF fileCentral Moneymarkets Unit . OTC Derivatives Trade Repository . Matching and Confirmation Service . Reference Manual . December

Central Moneymarkets Unit

OTC Derivatives Trade Repository

Matching and Confirmation Service

Reference Manual

December 2012

VERSION HISTORY

Effective Date Paragraphs Amendments

December 2012 First issue Not applicable

Hong Kong Monetary Authority CMU OTC Derivatives Trade Repository Matching and Confirmation Service Reference Manual

December 2012 Page 2

CONTENTS Clause Page 1. INTRODUCTION……………………………………………………………………….. 6 1.1 Purpose…………………………………………………………………………………...... 6 1.2 CMU contact for TR Service……………………………………………………………… 6 1.3 Related Documents………………………………………………………………………... 7 1.4 Operating Procedures……………………………………………………………………… 7

2. BACKGROUND………………………………………………………………………….. 8 2.1 Enquiries on Mandatory Clearing Requirements………………………………………….. 9

3. MATCHING AND CONFIRMATION SERVICE……………………………………. 10 3.1 HKTR Matching and Confirmation Service Product Scope……………………………… . 10 3.2 Business Day……………………………………………………………………………...... 11

4. PARTICIPATION PROCEDURES…………………………………………………….. 12 4.1 CMU TR Membership……………………………………………………………………... 12 4.2 Operation Information……………………………………………………………………... 13 4.3 Obligations of CMU TR Member………………………………………………………….. 14

5. LEAVING THE MATCHING AND CONFIRMATION SERVICE…………………. 16 5.1 Termination Notice………………………………………………………………………… 16 5.2 Termination Arrangements………………………………………………………………… 16

6. SUSPENSION OR TERMINATION BY THE HKTR………………………………… 17 6.1 Suspension or Termination of Access to Service………………………………………….. 17

7. CONNECTING TO THE HKTR………………………………………………………... 18 7.1 Connection and Information Submission Channels………………………………………... 18

8. TRADE INFORMATION SUBMISSION………………………………………………. 19 8.1 Trade Information Submission Approach………………………………………………….. 19 8.2 Parties to Submit Trade Information………………………………………………………..20 8.3 Scope of Trade Information to be Submitted………………………………………………. 20 8.4 Format of Trade Information Submission…………………………………………………..21 8.5 Timeframe for Trade Information Submission…………………………………………….. 23 8.6 HKTR System Window for Capturing Trade Information…………………...……………. 23



Clause Page 9. TRADE MATCHING AND CONFIRMATION……………………………………….. 25 9.1 Transaction or Trade Event Validation…………………………………………………….. 25 9.2 Transaction or Trade Event Matching and Confirmation………………………………….. 25

10. TRADE SUBMISSION FOR CLEARING AND DECLEARING…………………….. 28 10.1 Trade Submission for Central Clearing……………………………………………………. 28 10.2 Declearing of Trade from the CCP and Resend for Clearing……………………………… 28

11. MATCHING AND CONFIRMATION SERVICE REPORTS……………………….. 30 11.1 Types of Report……………………………………………………………………………. 30 11.2 Reconciliation of Reports………………………………………………………………….. 30

12. CONTINGENCY ARRANGEMENTS………………………………………………….. 31 12.1 Local Terminal Service…………………………………………………………………….. 31 12.2 Typhoon and Rainstorm Procedures……………………………………………………….. 31

13. BILLING………………………………………………………………………………….. 32 13.1 Settlement Arrangements…………………………………………………………………. 32 13.2 Billing Arrangements……………………………………………………………………... 33



APPENDICES

Version date TR.1 CMU TR Membership Application Form

December 2012

TR.2 CMU TR Member Record of Authorized Signatures

December 2012

TR.3 CMU TR Member Profile Maintenance Form

December 2012

TR.4 CMU TR Member Administrative Account Setup Form

December 2012

TR.5 Broker List of CMU TR Member

December 2012

TR.6 Designation of Hong Kong Dollar Account for Settling Fees and Charges

December 2012

TR.7 Direct Debit Limit of Settlement Bank

December 2012



ANNEXES

Version date Availability 1 HKTR Matching and Confirmation

Service Product Scope

December 2012 Attached

2 Fee Scale for Matching and Confirmation Service

December 2012 Attached

3 Matching and Confirmation Service Agreement

December 2012 Available on request

4 Trade Repository Administration and

Interface Development Guide – Matching and Confirmation Service


5 HKTR Matching and Confirmation Service Training Materials (Compact Disc)




1. INTRODUCTION This OTC Derivatives Trade Repository Matching and Confirmation Service

Reference Manual (“Manual”) describes the matching and confirmation service for

over-the-counter (“OTC”) derivatives transactions (“Matching and Confirmation

Service”) provided by the OTC Derivatives Trade Repository (“HKTR”) operated by

the Central Moneymarkets Unit (“CMU”) to CMU TR Members in accordance with,

and subject to any limitations contained in their Matching and Confirmation Service

Agreements with the HKMA. Any of the provisions of this Manual or of operational

circulars may be varied at any time upon written notice to that effect being given by

the HKMA to CMU TR Members without their agreements.

1.1 Purpose

Set out in this Manual are the procedures for CMU TR Membership and

communications, the security provision underlying the Matching and Confirmation

Service and details of the various processes. The Appendices at the back of this

Manual provide sample forms for use by CMU TR Members.

1.2 CMU contact for TR Service

All requests for further information relating to the Matching and Confirmation

Service described in this document should be directed to:

Trade Repository – Central Moneymarkets Unit,

Hong Kong Monetary Authority

55th Floor

Two International Finance Centre

8 Finance Street

Central

Hong Kong

Telephone : (852) 8100 3115

Facsimile : (852) 2878 1679

e-mail : [email protected]



For technical support and enquiries on the operation of the computer system for

accessing and making use of the Matching and Confirmation Service, please contact

the Hong Kong Interbank Clearing Limited (“HKICL”) at:

Services Support

Hong Kong Interbank Clearing Limited

Telephone : (852) 2533 1100

Facsimile : (852) 2533 1123

e-mail : [email protected]

1.3 Related Documents

The following documents issued by the HKMA may contain further information in

relation to the operation of the Matching and Confirmation Service:

(a) Operating Procedures for Trade Repository - User Manual for Participants

(Administrative Functions)

(b) Operating Procedures for Trade Repository - User Manual for Participants (Trade

Functions – Matching and Confirmation Service)

(c) Operating Procedures for Trade Repository - User Manual for Participants (Trade

Functions – Matching and Confirmation Service - Appendix)

(d) Trade Repository Administration and Interface Development Guide – Matching

and Confirmation Service (“Matching and Confirmation Service AIDG”)

1.4 Operating Procedures

For the sake of clarity, the term “Operating Procedures” mentioned in this Manual

include this OTC Derivatives Trade Repository Matching and Confirmation Service

Reference Manual and operational circulars issued by the HKMA from time to time.



2. BACKGROUND

The global financial crisis in 2008 triggered a global movement to improve

transparency and reduce counterparty risks in the OTC derivatives markets, resulting

in reforms to the OTC derivatives markets on various fronts. The reform measures

adopted by the international regulatory community include requiring all OTC

derivatives transactions be reported to trade repositories (“TRs”) and all standardized

OTC derivatives transactions be cleared at central counterparty (“CCP”) clearing

facilities.

To meet international standards, the HKMA announced in December 2010 to

establish a TR in Hong Kong under the CMU, and that a link will be developed

between the TR and the CCP for OTC derivatives to be launched by Hong Kong

Exchanges and Clearing Ltd. (“HKEx”) to allow eligible transactions to be passed to

the CCP for central clearing. The HKMA also worked in concert with the

Government and the Securities and Futures Commission (“SFC”) to build a regulatory

regime for the OTC derivatives markets (“OTC regulatory regime”) under the

Securities and Futures Ordinance (“SFO”), including requirements for mandatory

reporting to the TR of the HKMA and mandatory clearing at designated CCPs.

Under the OTC regulatory regime to be established, Authorized Institutions (“AIs”)

and Approved Money Brokers (“AMBs”) licensed and regulated by the HKMA under

the Banking Ordinance, Licensed Corporations (“LCs”) licensed and regulated by the

SFC under the SFO, and any Hong Kong persons that are a counterparty in a specified

OTC derivatives transaction and with an activity level in OTC derivatives exceeding a

threshold are expected to be required to clear specified transactions through a

designated CCP, except where an exemption applies.

The HKTR provides an electronic platform for matching and confirming the details of

OTC derivatives transactions efficiently, securely and in conformity with market

standards, and submitting transactions to the CCP of the HKEx for central clearing,



primarily for facilitating market participants to meet the mandatory clearing

requirements under the OTC regulatory regime.

2.1 Enquiries on Mandatory Clearing Requirements

AIs should direct their enquiries on the mandatory clearing requirements to their usual

supervisory contacts at the Banking Supervision Department of the HKMA.

AMBs should direct their enquiries on the mandatory clearing requirements to their

usual contacts at the Payment Systems Oversight and Licensing Division of the

Banking Conduct Department of the HKMA.

Entities or persons other than an AI or an AMB should direct their enquiries on the

mandatory clearing requirements to the SFC at: [email protected].



3. MATCHING AND CONFIRMATION SERVICE

The HKTR provides service to CMU TR members who are users of the CCP of the

HKEx for matching and confirming OTC derivatives transactions eligible and

intended for central clearing at the CCP of the HKEx, and submitting the confirmed

details of the transactions to it for clearing. For the avoidance of doubt, the HKTR

does not match and confirm transactions not intended for central clearing at the CCP

of the HKEx.

Pursuant to the Matching and Confirmation Service Agreement, the transactions

matched and confirmed through the Service would be binding on the CMU TR

Members.

3.1 HKTR Matching and Confirmation Service Product Scope

The types of OTC derivatives product supported by the Matching and Confirmation

Service of the HKTR (“HKTR Matching and Confirmation Service Product Scope”)

are determined by the types of product subject to mandatory clearing under the OTC

regulatory regime and those supported by the CCP of the HKEx.

Over time, new OTC derivatives products may be added to the Matching and

Confirmation Service as the scope of products subject to mandatory clearing under the

OTC regulatory regime expands. It should be noted that products supported by the

CCP of the HKEx but not subject to mandatory clearing may not be supported by the

Matching and Confirmation Service of the HKTR.

The HKTR Matching and Confirmation Service Product Scope can be found in

Annex 1. The updated list is also available in the HKTR Section of the HKMA

website. Changes to the list will be advised to CMU TR Members through circulars.



3.2 Business Day

The term “business day” as stipulated in this Manual means a day other than a

Saturday, a Sunday or a day which is a general holiday as specified in the General

Holidays Ordinance (Chapter 149 of the Laws of Hong Kong) except otherwise

specified in the relevant chapters of this Manual.



4. PARTICIPATION PROCEDURES

4.1 CMU TR Membership

The Matching and Confirmation Service of the HKTR is open only to Clearing

Members of the CCP of the HKEx. For the avoidance of doubt, Clearing Members of

the CCP of the HKEx that are not subject to mandatory clearing requirement under

the OTC regulatory regime are eligible to participate in the Service. Similarly,

transactions in a product within the HKTR Matching and Confirmation Service

Product Scope that are not subject to mandatory clearing, e.g. if one transacting party

is exempted from mandatory clearing, can be submitted to the HKTR for matching

and confirmation, and submission for central clearing, on a voluntary basis.

Application for CMU TR Membership must be made in writing to the HKTR. Prior

to becoming a CMU TR Member, each successful applicant is required to enter into a

contractual agreement with the HKMA, i.e. the Matching and Confirmation Service

Agreement. Each successful applicant will be assigned and advised a unique CMU

TR Member code to represent its identity in the HKTR system.

The list of CMU TR Members and their CMU TR Member codes can be found in the

HKTR section of the HKMA website. The list will be updated regularly. Changes to

the list will also be advised to CMU TR Members through circulars.

The Matching and Confirmation Service Agreement, which incorporates the

provisions of this Manual, as updated from time to time, together with any directions

given in HKTR circulars by the HKMA, sets out the terms and conditions of the

Matching and Confirmation Service Agreement with which a CMU TR Member is

required to comply.

It should be noted that apart from the Matching and Confirmation Service, the HKTR

may also provide reporting service to CMU TR Members for them to fulfil their

statutory reporting obligations under the OTC regulatory regime (“Reporting



Service”). The Reporting Service is provided independently of the Matching and

Confirmation Service, and is subject to a different set of procedures. Trade

information submitted to the HKTR under the Matching and Confirmation Service

cannot be applied to the Reporting Service.

4.2 Operation Information

Before joining the Matching and Confirmation Service, a CMU TR Member must

supply certain operation information to the HKTR by completing and submitting the

following forms to the HKTR:

(a) CMU TR Membership Application Form attached at Appendix TR.1

(b) CMU TR Member Record of Authorized Signatures form attached at Appendix

TR.2

(c) CMU TR Member Profile Maintenance Form attached at Appendix TR.3

(d) CMU TR Member Administrative Account Setup Form at Appendix TR.4

(e) Broker List of CMU TR Member, if applicable, at Appendix TR.5

(f) Designation of Hong Kong Dollar Account for Settling Fees and Charges form

attached at Appendix TR.6

(g) Direct Debit Limit of Settlement Bank form, if applicable, attached at Appendix

TR.7

Unless otherwise required by or agreed with the HKTR, the above completed forms

must be submitted to the HKTR at least 10 business days before the date on which the

CMU TR Member can commence making use of the Matching and Confirmation



Service, subject to the completion of other relevant logistical and technical

arrangements.

After the CMU TR Membership has commenced, any changes to the operation

information must be notified to the HKTR in writing, supported by updated version of

the relevant forms, if applicable. Unless otherwise required by or agreed with the

HKTR, CMU TR Members should notify the HKTR a change at least 10 business

days before the change takes effect.

4.3 Obligations of CMU TR Member

All CMU TR Members must fulfil the following obligations:

(a) All CMU TR Members shall have systems in place which are complementary to

the HKMA/HKICL’s contingency arrangements so as to enable HKMA/HKICL

to ensure timely recovery of its usual operation in the event of occurrence of an

adverse contingency affecting such operation. Such contingency arrangements

shall be modified from time to time in the manner required by the HKMA, and

the HKMA shall notify CMU TR Members the changes accordingly.

(b) CMU TR Members shall participate in the contingency drills arranged by the

HKMA/HKICL from time to time so as to verify the readiness of CMU TR

Members’ contingency arrangements.

(c) CMU TR Members shall participate in various member/simulation tests

arranged by the HKMA/HKICL from time to time so as to prepare themselves

ready for any new service to be launched.

The HKMA will through HKICL monitor performance by CMU TR Members of

these obligations under the arrangements.



In the event that HKICL becomes aware of any non performance by any CMU TR

Member of its obligations under these arrangements, HKICL shall as soon as

practicable inform the CMU TR Member concerned and request it to ensure

performance of the relevant provision, and inform the HKMA of such incident.



5. LEAVING THE MATCHING AND CONFIRMATION SERVICE

5.1 Termination Notice

At least 30 calendar days’ notice in writing is required if a CMU TR Member is to

withdraw from the Matching and Confirmation Service or terminate its CMU TR

Membership.

5.2 Termination Arrangements

After a CMU TR Member leaves the Matching and Confirmation Service, or

terminates its CMU TR Membership, it will no longer be able to gain access through

the HKTR to those of its transactions previously matched and confirmed, and

submitted to the CCP of the HKEx, including where it becomes necessary to declear a

transaction from the CCP. It will need to approach the CCP of the HKEx directly or

to do so through another matching and confirmation platform, subject to the relevant

procedures promulgated by or agreed with the CCP.



6. SUSPENSION OR TERMINATION BY THE HKTR

6.1 Suspension or Termination of Access to Service

Under the terms of the Matching and Confirmation Service Agreement, the HKMA

may suspend or terminate the membership of a CMU TR Member or its access to the

Matching and Confirmation Service under specified circumstances. On suspension or

termination of a CMU TR Membership, the HKTR will:

(a) prevent the CMU TR Member from accessing the Matching and Confirmation

Service until the HKMA authorises otherwise

(b) inform other CMU TR Members as soon as practicable about the suspension or

termination

The Matching and Confirmation Service will, however, continue to be in operation

subject to the terms and conditions of the Matching and Confirmation Service

Agreement. Insofar as any transactions or trade events submitted to the HKTR before

the suspension are concerned, the HKTR system will continue to match and confirm

them after the suspension takes effect. Where a transaction or trade event does not

require further input from the suspended CMU TR Member (which is no longer

feasible after the suspension) for matching and confirmation, and submission for

clearing, e.g. correction of mis-matched details, making a request for sending to

clearing, it will be submitted to the CCP for clearing after it is matched and confirmed

by the HKTR system.



7. CONNECTING TO THE HKTR

7.1 Connection and Information Submission Channels

CMU TR Members have to submit trade information of OTC derivatives transactions

to the HKTR for matching and confirmation through the channels specified by the

HKTR. All CMU TR Members can submit trade information to the HKTR through

internet. CMU TR Members that are users of FinNet1 and SWIFTNet can also submit

trade information via such two channels. For the avoidance of doubt, CMU TR

Members may adopt multiple channels for the submission of trade information of

different transactions, of same or different products, to the HKTR simultaneously.

The system connection and interface of CMU TR Members with the HKTR for trade

information submission should be developed and established in conformity with the

specifications set out in the Matching and Confirmation Service AIDG. Submission

of trade information via the established channels must also be made in conformity

with the standards specified in the AIDG, for example, standards of file format, file

naming convention, configuration of parameters under different channels, user

authentication, etc.

1 The operation of FinNet is expected be taken up by the HKICL starting from March 2013. Users of the new communication platform (“ICL Net”) replacing FinNet can submit specified trade information to the HKTR through the new platform



8. TRADE INFORMATION SUBMISSION

8.1 Trade Information Submission Approach

Except in the case of backloading outstanding transactions to the HKTR, CMU TR

Members have to adopt life-cycle approach for submitting trade information of OTC

derivatives transactions to the HKTR for matching and confirmation, and submission

for central clearing. Under the life-cycle approach, CMU TR Members have to

submit trade information at inception and on subsequent trade events (collectively

referred to as “trade events” hereinafter) individually and sequentially, in

chronological order, as they occur until the expiry or scheduled termination of the

contract. Each submission made will therefore signify a single trade event.

In the case of backloading, CMU TR Members have to submit trade information of

the outstanding position of the transactions intended for matching and confirmation to

the HKTR. New trade events of an outstanding transaction can be submitted to the

HKTR only after the transaction has been backloaded to the HKTR, and similarly,

one-by-one in sequential order.

Trade events applicable to transactions in different types of OTC derivatives product

may be different, due to differences in the economic substance and underlying of

different products, as well as the specific clearing requirements of the CCP of the

HKEx for the products. Generally, the trade events supported by the HKTR for

matching and confirmation include backloading, trade inception, amendment of

transaction details, novation, early termination of trade, submission for central

clearing at CCP, and declearing from CCP. In addition, CMU TR Members may

initiate requests to manage the trade events submitted to the HKTR, e.g. cancellation,

quit. For details of the trade events applicable to different products and under

different circumstances, please refer to the Matching and Confirmation Service AIDG.

Each trade event should be backloaded or submitted to the HKTR only once. In the

event that a CMU TR Member is simultaneously making use of multiple channels for



trade information submission, it must ensure that there is no duplication of submission

through the various channels.

8.2 Parties to Submit Trade Information

If a trade event is intended to be matched and confirmed at the HKTR through the

automatic mode, both transacting CMU TR Members of the transaction concerned

have to submit the trade information of the event (in opposite direction) to the HKTR.

If the event is intended for matching and confirmation by the affirmation mode, only

one of the transacting CMU TR Members is required to submit, and its counterparty

CMU TR Member can confirm the event by affirming on the HKTR system the event

submitted by the submitting CMU TR Member (see details in clause 9.2).

Transacting CMU TR Members should agree among themselves the matching and

confirmation mode applicable to their trade events. For the avoidance of doubt, a

CMU TR Member may adopt different matching and confirmation modes for

transactions with different counterparty CMU TR Members, and for different

transactions or trade events with the same counterparty CMU TR Member.

8.3 Scope of Trade Information to be Submitted

The scope of information of a trade event required to be submitted to the HKTR for

matching and confirmation will depend on the nature of the event, the type of product

to which the transaction belongs and the relevant clearing requirements of the CCP of

the HKEx. The information required generally includes information required by the

HKTR to administer the trade events received from CMU TR Members, information

commonly adopted by the industry for matching and confirmation (in accordance with

the standards promulgated by the International Swaps and Derivatives Association

(“ISDA”)), and information required by the CCP of the HKEx for facilitating central

clearing. For details of the information to be submitted for different trade events and

products, and under different circumstances, please refer to the Matching and

Confirmation Service AIDG.



8.4 Format of Trade Information Submission

CMU TR Members should observe the standards specified in the Matching and

Confirmation Service AIDG in terms of the format and contents of the information

submitted to the HKTR for matching and confirmation.

Format of information submission

Trade event records submitted to the HKTR must be in either Extensible Markup

Language (“XML”) (the extended Financial Products Markup Language (“FpML”))

format or Comma Separated Value (“CSV”) format. The technical specifications for

representing individual transaction details under the two formats, e.g. the nature,

length and layout of the data strings, may also be different. A CMU TR Members

may opt to adopt the format that can best suit its requirements and technical capability.

For the avoidance of doubt, a CMU TR Member may opt to adopt different formats

for submitting trade information of different transactions to the HKTR. For details of

the technical specifications of trade information submission under the two formats,

please refer to the Matching and Confirmation Service AIDG.

The HKTR accepts submission of a trade event request file containing records of

multiple OTC derivatives transactions and multiple trade events of a transaction.

When preparing and submitting files containing trade event information to the HKTR,

reporting entities also have to observe other technical standards set out in the

Matching and Confirmation Service AIDG, e.g. file identification and authentication

standards, and configuration standards applicable to the two information formats and

different submission channels, i.e. internet, FinNet and SWIFTNet.

Contents of information submitted

The contents of individual data strings contained in a trade event record should reflect

the value of the corresponding transaction details applicable to or referred to in the

trade event agreed by the transacting CMU TR Members, e.g. the product type,



currency type, price/rate level, transaction amount, transaction date, payment and

settlement conventions, etc., and may vary from one transaction to another. However,

CMU TR Members are required to observe the enumerations and coding schemes set

out in the Matching and Confirmation Service AIDG in representing the transaction

details so as to facilitate the processing of trade events by the HKTR and submission

of the events to the CCP of the HKEx for central clearing. The applicable ISDA

standards (the relevant versions of the ISDA standards are specified in the Matching

and Confirmation Service AIDG) have been followed in setting the enumerations and

coding schemes for representing information applicable to the matching and

confirmation process. CMU TR Members, however, should also observe the

requirements specified by the CCP of the HKEx, if any, to supply specific value in

representing individual transaction details when submitting trade information to the

HKTR for matching and confirmation, and submission to the CCP for clearing.

Identifiers for transacting parties and brokers

A CMU TR Member submitting a trade event to the HKTR for matching and

confirmation should provide the CMU TR Member code of the counterparty CMU TR

Member as the identifier for identifying the identity of the counterparty.

CMU TR Members have to confirm with transacting counterparties their CMU TR

Member codes for reporting to the HKTR. Upon request of a counterparty CMU TR

Member, CMU TR Members should supply their CMU TR Member codes to the

counterparty CMU TR Member for reporting to the HKTR.

Apart from counterparties, CMU TR Members may also be required to identify the

brokers involved in brokering their transactions. CMU TR Members have to notify

the HKTR the brokers that may be involved in brokering OTC derivatives

transactions for them, by filing the Broker List of CMU TR Member at Appendix

TR.5 to the HKTR. The list of brokers that have been notified to the HKTR by any

CMU TR Members, together with the identifiers assigned by the HKTR to the brokers

for identifying the brokers in the TR system can be found in the HKTR section of the



HKMA website. CMU TR Members have to report the identifier assigned to a broker

for identifying the broker in a transaction.

8.5 Timeframe for Trade Information Submission

The HKTR has not set any minimum or maximum time limit for submitting a trade

event to it for matching and confirmation after the event is agreed by the transacting

CMU TR Members. The HKTR, however, will not accept requests for matching and

confirmation of trade events of a transaction that take effect on or after the maturity

day of the transaction. In addition, the HKTR will only accept requests for sending a

trade event (except for new trades and backloading of outstanding transactions) to the

CCP of the HKEx for central clearing on or after the effective date of the event.

CMU TR Members, however, should observe the schedule, rules and requirements of

the CCP of the HKEx as well as the requirements in the OTC regulatory regime, if

any, in deciding the timing for submitting a trade event to the HKTR for matching and

confirmation, and submission for central clearing.

8.6 HKTR System Window for Capturing Trade Information

The HKTR system is open 7 days a week and 24 hours a day for capturing

information of OTC derivatives trades submitted by CMU TR Members except during

certain outage windows for system maintenance and software migration. The outage

windows for submitting trade events to the HKTR through different channels are set

out in the following table.



Channel Monday to Saturday

(Hong Kong time)

Sunday

(Hong Kong time)

UI upload via SWIFTNet

FileAct via SWIFTNet

0:30 - 4:00 23:00 (Sat)– 12:00

(and additional outage period published by SWIFT from time to

time, if any)

FTS via FinNet 0:30 – 4:00 23:00 (Sat) – 5:00

UI upload via Internet 0:30 – 4:00 23:00 (Sat) – 5:00

While CMU TR Members will not be able to upload trade event request files through

the user interface (“UI”) functions via the internet or SWIFTNet during the system

outage window, members can continue to submit files through FileAct via SWIFTNet

or File Transfer Service (“FTS”) via FinNet, the files will be queued in the system and

will be automatically captured for processing after the system resumes operation.



9. TRADE MATCHING AND CONFIRMATION

9.1 Transaction or Trade Event Validation

Upon receiving a trade event request file from a CMU TR Members, the HKTR

system will validate the format, contents and syntax of the file as well as that of the

individual trade event records contained in the file. If an error is detected, the whole

file or individual trade event records will be rejected, depending on whether the error

occurs at file level or trade event record level. A response will be provided to the

CMU TR Members submitting the trade event request file about whether the file or

individual trade event records have been accepted or rejected.

Trade event records successfully validated will then go through the matching and

confirmation process.

9.2 Transaction or Trade Event Matching and Confirmation

The matching and confirmation of trade events in the HKTR system can be conducted

through either one of the following two modes:

(a) Automatic mode

After a trade event record submitted by a CMU TR Member passes the validation

process, the HKTR system will automatically and immediately search for the trade

event record submitted by the CMU TR Member’s counterparty (also a CMU TR

Member) and represents the same event (but in opposite direction), and match the two

records by comparing the details contained in the records.

Where the details of a trade event record submitted by a CMU TR Member can be

fully matched with the details of a record submitted by its counterparty in the

transaction, the trade event is deemed matched and confirmed in the HKTR system.



CMU TR Members submitting the trade event records can check from HKTR system

those records that have been matched and confirmed.

Where no trade event record submitted by the counterparty CMU TR Member fully

matching the record submitted by a CMU TR Member can be found, the trade event

record will deem to be unmatched. The HKTR system will identify and list out trade

event records submitted by the counterparty CMU TR Member having key attributes

(contents in certain identifying fields) same as the record submitted by the CMU TR

Member. In case there are multiple records bearing the same key attributes, the

HKTR system will produce a list showing the percentage matched (of the other details)

of each of such records to facilitate the two CMU TR Members involved to identify

and resolve the potential discrepancies.

(b) Affirmation mode

Where a CMU TR Member opts not to submit a trade event record representing its

side of the transaction to the HKTR, or the record submitted by it is incorrect and

therefore cannot be fully matched automatically with the record submitted by its

counterparty, the trade event may be matched and confirmed by the affirmation mode.

The CMU TR Member can affirm the trade event record submitted by the

counterparty CMU TR Member and alleged to have been conducted with it (but

cannot be automatically matched in the HKTR system). By affirming a trade event

record submitted by its counterparty, a CMU TR Member agrees to adopt the details

of the trade event record submitted by the counterparty. Nevertheless, the CMU TR

Member affirming the record will be required to supplement the details by inputting

to the HKTR system certain information specific to the affirming CMU TR Member.

The HKTR system will treat trade event record affirmed as matched and confirmed,

which will be covered in the report on matched and confirmed trade event records to

the CMU TR Members.

It is up to the transacting CMU TR Members to agree among themselves whether both

of them should submit a trade event record representing their respective side of an



OTC derivatives transaction to the HKTR for automatic matching, or only one side of

the transaction will submit while the other side will affirm the record submitted by the

counterparty. Where a CMU TR Member has submitted an incorrect trade event

record to the HKTR (and hence cannot be automatically matched with the record

submitted by the counterparty), but later opts to affirm the record submitted by the

counterparty, the CMU TR Member has to cancel the incorrect record submitted by it

to the HKTR system.



10. TRADE SUBMISSION FOR CLEARING AND DECLEARING

10.1 Trade Submission for Central Clearing

After a new trade or a backloaded trade is matched and confirmed on the HKTR

system, the HKTR system will automatically and immediately send the trade to the

CCP of the HKEx for central clearing. CMU TR Members can check from the HKTR

system on whether the trade has been delivered to the CCP, or whether the trade is

being processed or has been accepted or rejected for clearing by the CCP.

10.2 Declearing of Trade from the CCP and Resend for Clearing

After a trade has been accepted by the CCP of the HKEx for central clearing, it has to

be decleared from the CCP before any change, including amendment, termination or

novation, can be made to the trade. The transacting CMU TR Members have to

submit a request to the HKTR for declearing the trade from the CCP of the HKEx,

and the HKTR will submit the declear request to the CCP accordingly. CMU TR

Members can check from the HKTR system on whether the declear request has been

accepted by the CCP.

After a trade has been decleared from the CCP of the HKEx, the transacting CMU TR

Members can then initiate an amendment trade event to the HKTR for amending the

details of the trade. The amendment trade event will then undergo the matching and

confirmation process of the HKTR system. For a matched and confirmed amendment

trade event, the transacting CMU TR Members, however, have to submit a request to

the HKTR for submitting the event to the CCP for central clearing again. As the CCP

of the HKEx does not accept central clearing of post-trade trade events with a future

effective date, transacting CMU TR Members should request (to the HKTR) for their

clearing only on or after the effective date of the trade events. CMU TR Members

can check from the HKTR system the list of matched and confirmed post-trade trade

events, so that they can arrange to send instructions to the HKTR for re-sending the



events to the CCP of the HKEx for central clearing on or after the effective date of the

events.



11. MATCHING AND CONFIRMATION SERVICE REPORTS

11.1 Types of Report

There are three types of report:

(a) System reports –generated automatically by the system. Reports are generated

in off-line batch mode at pre-defined time or after a specific event, and can be

delivered via file transfer or viewed/downloaded via UI function

(b) Enquiry-Initiated User Requested reports – Reports are generated in

background mode. Users can check report generation status, view or

download the generated report via the View Report List function

(c) UI Enquiry reports – Reports are tied to the enquiry functions, showing the

same result set as the enquiry. Reports are generated in on-line real-time

mode and then sent to the browser front-end for the user’s viewing

Please refer to the various User Manuals for Participants of the Operating Procedures

for Trade Repository for the summary of report list, report samples, and the schedule

and procedures for retrieving the relevant reports through different channels and in

different formats.

11.2 Reconciliation of Reports

CMU TR Members are required to download all the reports under the Matching and

Confirmation Service and reconcile their reports on a daily basis. Any discrepancies

should be reported to the HKMA as soon as practicable and in any event, not later

than 7 business days from the date of the relevant report. If any report is reported to

be incorrect, the HKMA will make the relevant investigation and if applicable, re-

issue the report revised as necessary.



12. CONTINGENCY ARRANGEMENTS

12.1 Local Terminal Service

In case a CMU TR Member cannot access the HKTR system through its own

production facilities due to prolonged system connectivity problems with SWIFTNet,

the CMU TR Member may make use of the Local Terminal Service (“LTS”) provided

by the HKICL to access the Matching and Confirmation Service. The CMU TR

Member can generate the relevant trade event request files from its own system, and

then upload the files to the HKTR system directly at the terminals located at the office

of the HKICL.

LTS should be used as the last resort for accessing the Matching and Confirmation

Service. CMU TR Members should rely on their own backup facilities for

contingency operations. In case a CMU TR Member needs to utilise LTS under

contingency situation, the CMU TR Member has to apply to the HKICL directly in

accordance with the arrangements promulgated by the HKICL.

12.2 Typhoon and Rainstorm Procedures

The Matching and Confirmation Service of the HKTR will remain accessible under

rainstorm and typhoon scenarios. CMU TR Members can continue to send trade

events to the HKTR system for matching and confirmation, and for submission to the

CCP of the HKEx for central clearing. If the CCP of the HKEx is not open under

rainstorm and typhoon scenarios, the HKTR will store the trade events matched and

confirmed during the closure of the CCP, and submit the events to the CCP upon its

re-opening of business.



13. BILLING

In entering into an agreement for subscribing to any service of the HKTR, CMU TR

Members will undertake to pay a membership fee if applicable.

CMU TR Members using the Matching and Confirmation Service will also be subject

to transaction charges based on the usage of the HKTR System.

The CMU TR Membership fee and the transaction charges for the Matching and

Confirmation Service are set out in the fee scale in Annex 2. The updated scale is

available in the HKTR section of the HKMA website. Changes to the scale will be

advised to CMU TR Members through circulars.

13.1 Settlement Arrangements

For CMU TR Members which are also CMU Members (participants of CMU service

offered by the CMU in respect of safe custody, recording and transfer of debt

securities) and are direct participants in the Hong Kong dollar Real Time Gross

Settlement (“RTGS”) system (“Direct Participant CMU TR Members”), their fees are

settled through their own settlement accounts maintained with the HKMA. Other

CMU TR Members are required to appoint a settlement bank (“Appointed Settlement

Bank”) which is a CMU member and a direct participant in the Hong Kong dollar

RTGS system for the settlement of their fees.

CMU TR Members are required to designate their settlement accounts and authorise

the CMU to debit the fees from the designated accounts by using the Designation of

Hong Kong Dollar Account for Settling Fees and Charges form (“Account

Designation Form”) at Appendix TR.6.

To enable direct debiting of fees by the CMU from the designated settlement accounts,

Direct Participant CMU TR Members and Appointed Settlement Banks shall

authorise and instruct the CMU to set up direct debit limits in the CMU system. The



CMU system makes reference to the last four digits of the CMU TR Member Code

(“HKTR Billing Code”) in referring to a CMU TR Member in the system. Direct

Participant CMU TR Members should advise the CMU the direct debit limits to be set

in the Account Designation Form at Appendix TR.6. Appointed Settlement Banks

should advise the CMU the direct debit limits to be set for their clients in the Direct

Debit Limit of Settlement Bank form at Appendix TR.7.

13.2 Billing Arrangements

All fees are invoiced in Hong Kong dollar and billed monthly to CMU TR Members.

The arrangements are as follows:

(a) The total amount of fees payable will be advised to Members on the 10th day

of the following month or next business day if the 10th is not a business day to

the contacts for the Matching and Confirmation Service specified by Members

in the CMU TR Member Profile Maintenance Form in Appendix TR.3.

(b) On the business day following the billing day, Members shall ensure that

sufficient funds are arranged in their respective settlement accounts.

(c) The total fees will be automatically debited from the settlement account

designated by Members (as at Appendix TR.6) on the 15th or the following

business day if 15th is not a business day.

(d) Upon completion of the billing process, the RTGS system will format the

settlement advices in MT900 format and distribute to the CMU TR Members

or its Appointed Settlement Banks via SWIFT. The advice will bear the

HKTR Billing Code of the CMU TR Member concerned for reference.

Hong Kong Monetary Authority Central Moneymarkets Unit

OTC Derivatives Trade Repository Appendix TR.1

CMU TR Membership Application Form

To : Hong Kong Monetary Authority Date:

Facsimile: (852) 2878 1679

From :

Name of Institution

We request for your approval for ___________________________________ (Name of the Applicant) to be admitted as a Member of the OTC Derivatives Trade Repository operated by the Central Moneymarkets Unit (CMU TR Member). We understand that the continuation of a CMU TR Membership is subject to the CMU TR Member’s compliance with the applicable service agreement with the Monetary Authority, and rules and operating procedures from time to time prescribed by the Monetary Authority. The Monetary Authority may suspend or terminate the membership of a CMU TR Member in the event of a breach of any of the agreement, rules and operating procedures. Applicant Institution : (Legal Full Name)

Address :

Telephone :

Facsimile :

Name(s) of person(s) to contact in respect of this application :

e-mail address :

_________________________ Authorized Signature(s)

Company Chop



CMU TR Member Record of Authorized Signatures

To : Hong Kong Monetary Authority Date: __________________ Name of Participant :__________________________________________________________________ CMU TR Member Code :________________________ Telephone Number : ________________________ Address :__________________________________________________________________ The persons in the table below are authorized to sign for and on behalf of us under (please tick as appropriate):

Reporting Service

Matching and Confirmation Service

AUTHORIZED SIGNATURE AND/OR STAMP

NAME AND TITLE (IN BLOCK LETTERS)











SIGNING INSTRUCTIONS :

(Please add a new page if there are more authorized signatures to specify)

____________________________

Authorized Signature(s)

Company Chop



CMU TR Member Profile Maintenance Form


Facsimile: (852) 2878 1679

From : ( )

Name of CMU TR Member CMU TR Member Code

We refer to the appointment of our institution as a CMU TR Member, the following are the

information of our institution:

Type of Institution (please tick as appropriate)

Institution authorized or approved under the Banking Ordinance

Full Licensed bank Restricted Licence Bank

Deposit Taking Company Approved Money Broker

Licensed Corporation under the Securities and Futures Ordinance

Others

Place of Incorporation (please tick as appropriate)

Hong Kong Outside Hong Kong

Identification number (please provide all those numbers that your institution possesses)

Global Legal Entity Identifier or pre-LEI1 Issued by: ________________________________________

SWIFT BIC (Business Identifier Code issued by SWIFT under ISO9362)

Number of the Certificate of Incorporation (CI) or Certificate of Registration (CR) issued by the Companies Registry of Hong Kong2

Business Registration Number (BRN) issued by the Inland Revenue Department of Hong Kong2

Clearing Member Code at the OTC derivatives CCP of the HKEx

Notes

(1) Global Legal Entity Identifier (“Global LEI”) refers to the unique identifier for legal entity issued under the Global LEI System established by the Financial Stability Board (“FSB”). If the Global LEI is not yet available, please provide pre-LEI identification code (“pre-LEI”) in compliance with the Global LEI numbering scheme specified by the FSB and issued by an entity that has been allocated a prefix by the FSB (or the Global LEI System) for issuing such codes, if any.

(2) Please provide certified true copy of the certificate

Contact information for Reporting Service

Contact Person :

Telephone number :

Facsimile number :

Address :

Group/individual e-mail :

Contact information for Matching and Confirmation Service

Contact Person :

Telephone number :

Facsimile number :

Address :

Group/individual e-mail :

____________________________


Company Chop



CMU TR Member Administrative Account Setup Form To : Hong Kong Monetary Authority Date:

Facsimile: (852) 2878 1679

From : ( )


We refer to the appointment of our institution as a CMU TR Member, please set up

administrative account(s) for our institution to access the User Interface (“UI”) of the TR

system (please tick one or both as appropriate):

through Internet [Please provide SSL Client Certificate DN if this is chosen]

through SWIFTNet [Please provide SWIFT User DN if this is chosen]

SSL Certificate DN:

__________________________________________________

__________________________________________________

__________________________________________________

SWIFTNet User DN:

__________________________________________________

__________________________________________________

__________________________________________________

(Please also send a copy-and –paste-able copy of DN to the HKTR for accurate account setup purpose through email with a subject of “Admin Account Setup – CMU TR Member Code” )

____________________________


Company Chop



Broker List of CMU TR Member To : Hong Kong Monetary Authority Date:

Facsimile: (852) 2878 1679

From : ( )


The transactions of our institution may be brokered by the following broker(s):

Broker Name Broker address




(Please add a new page if there are more brokers to specify)

____________________________


Company Chop



Designation of Hong Kong Dollar Account for Settling Fees and Charges


Facsimile: (852) 2878 1679

From : ( )

Name of CMU TR Member CMU TR Member Code*

We agree to settle the fees and charges arising from service provided by the HKTR to our

institution by direct debit from our Hong Kong dollar settlement account specified below, on

instructions from the Monetary Authority.

(Please tick the appropriate box below and supply the corresponding settlement account

information)

My institution is a CMU Member and a direct participant of the Hong Kong dollar

RTGS System, please direct debit from the following settlement account of my

institution:

Account Number: ____________________

Please set up a direct debit limit of ___________________________ in the CMU

system for debiting the fees and charges from the above Account.

My institution is not a CMU Member or a direct participant of the Hong Kong dollar

RTGS System

Name of Settlement Bank: _______________________________

Our Account Number with the Settlement Bank: ___________________________

Contact Person and Phone Number: _______________________________

We have given standing authorisation to the above bank to accept such instructions

from the Monetary Authority. We have also agreed with the above settlement bank

on the direct debit limit for our maximum settlement amount for fees and charges

arising from the service provided by the HKTR. A direct debit limit form for our

institution will be forwarded to you directly from our settlement bank.

____________________________


Company Chop

(*The CMU system makes reference to the last 4 digits in the CMU TR Member Code of a CMU TR

Member in referring to the CMU TR Member in the system. The 4 digits will be applied in setting up

the direct debit limit in the CMU system.)



Direct Debit Limit of Settlement Bank


Facsimile: (852) 2878 1679

From : ( )

Name of Settlement Bank CMU Member Code

We have agreed with our client, ______________________________, (CMU TR Member

Code*) on the direct debit limit for its maximum settlement amount for the fees arising from

the service offered by the HKTR. We have also received standing authorisation from our

client to accept settlement instructions from the CMU.

The settlement details of our client are as follows:

Account Name : _________________________________________________

Settlement Account

Number in our book : _________________________________________________

Please set up a direct debit limit of ___________________________ in the CMU system for

debiting the fees and charges arising from the service offered by the HKTR to our client from

the above Account.

____________________________


Company Chop

(*The CMU system makes reference to the last 4 digits in the CMU TR Member Code of a CMU TR

Member in referring to the CMU TR Member in the system. The 4 digits will be quoted in the

settlement advice for reference.)