LegCo Panel on Financial Affairs
Meeting on 6 January 1997
Consultation paper
on investor participation in
Hong Kong Securities Clearing Co Ltd’s
Central Clearing and Settlement System


Hong Kong Clearing (the Company) will commence a public consultation on investor participation in the Central Clearing and Settlement System (CCASS), in early January.

2. The Company has developed a working model for investor participation which it believes will be the most desirable model for Hong Kong after studying the needs of investors and the various models adopted in other markets.

3. The working model recognises both the need and desire of investors to enjoy the benefits of a book-entry system of stock settlement; and at the same time to have legal and physical control over their shares deposited in CCASS.

Investor Accounts

4. The model proposes to allow investors to open Investor Accounts in CCASS. These accounts are essentially depository accounts which offer investors an additional method of safekeeping for their share certificates.

5. Currently, an investor may keep physical share certificates and register them in his own name; request his broker or custodian to open a CCASS stock segregated account with statement service; or entrust his shares to a broker or custodian entirely.

6. Under the proposed working model, both individual and corporate investors will be allowed to open Investor Accounts in CCASS. They will enjoy the following benefits:

  1. control movements of their shares deposited in CCASS;
  2. receive evidence of their shareholdings in CCASS;
  3. receive corporate information directly form listed issuers; and
  4. enjoy better legal protection of their shareholdings in CCASS.

7. The cost of the Investor Account service will depend on the activities of the individual investor, and the level of demand for the service. In general, the greater the demand, the lower the fees charged by Hongkong Clearing.


8. Investors will have to assume certain obligations and responsibilities. They will still have to manage the settlement risk with their brokers or custodians as settlements will continue to be handled through them.

9. Brokers and custodians will have to modify or upgrade their back-office operations and internal control systems to handle the new arrangements in transactions with Investor Account Holders.

10. As for Hong Kong Clearing, the admission of investors into CCASS represents the expansion of the scope of services from market intermediaries to investors. However, the service may pose an adverse impact on the financial position of the Company if demand is less than anticipated.

11. Copies of the consultation paper which includes details of the proposed working model will be delivered to Members of the Panel on 2 January 1997.

Financial Services Branch
Government Secretariat
30 December 1996

Last Updated on 18 August 1998