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Hong Kong, Thailand ink pact for clearing system

The Hong Kong Monetary Authority (HKMA) and the Bank of Thailand have launched a new cross-border clearing system, in the latest move to connect the city with other regional and global market centres. Traders and bankers in the two markets will now be able to settle foreign-exchange transactions in US dollars versus Thai baht in real time during Asian business hours, without having to wait for US markets to open to get the necessary dollars.

Hong Kong’s de facto central bank, by linking up its settlement system with the Bank of Thailand, will allow its Thai counterpart to dip into its huge US dollar pool and its advanced clearing system. Banks in Thailand can better manage their counterparty risk and improve operational efficiency in settling foreign-exchange transactions, while banks in Hong Kong will find new business opportunities to serve banks in Thailand, said Peter Pang Sing-tong, deputy chief executive of the HKMA, at the launch. This is the third time the HKMA has established such a link-up with an Asian central bank. Hong Kong connected its US dollar settlement system with Malaysia in 2006 and with Indonesia in 2010.

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