The Hong Kong Securities Clearing Company Limited (HKSCC) has issued a reminder to its participants about the importance of having proper risk management and funding arrangements in place to ensure the smooth operations of Hong Kong and China Connect markets. To comply with the settlement timelines stipulated by HKSCC, participants must monitor their exposures and fulfill their payment obligations to HKSCC on time. Failure to do so may result in default actions and/or disciplinary actions under Rule 3701 of the General Rules of CCASS. Such actions may include trading suspension, imposition of penalties, and/or additional risk management measures. To avoid these consequences, participants are strongly advised to review their existing operational and monitoring procedures and introduce enhancement measures where appropriate. The review should cover areas such as funding estimation, funding arrangement procedures, adequacy of funding and banking facilities, money and stock settlement procedures, contingency and business continuity plans, exposure monitoring, and back-up staff arrangements. As a best practice, participants should establish procedures to project payment obligations and arrange sufficient funding to meet such requirements in a timely manner. Participants should ensure that their contact records at the Clearing House are up-to-date and proactively update them when there are any changes.
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