HKSI Paper 1 Participating in the Hong Kong exchanges question: Clearing via a General Clearing Participant

HKSI Paper 1Participating in the Hong Kong exchanges

Lion Rock Securities Ltd is an Exchange Participant of SEHK but has not been admitted as a clearing participant of HKSCC. How must its exchange trades be cleared and settled?

A Through a General Clearing Participant of HKSCC with which it has a clearing agreement
B Directly with HKSCC, because every Exchange Participant is automatically a Direct Clearing Participant
C Bilaterally with each counterparty broker outside CCASS, still on a T+2 basis
D Through SEOCH, which clears cash-market trades for non-clearing participants

Show the answer and explanation

Answer: A. Through a General Clearing Participant of HKSCC with which it has a clearing agreement

HKSCC admits Direct Clearing Participants, which must be Exchange Participants and clear their own trades, and General Clearing Participants, which may also clear for non-clearing participants under clearing agreements. HKSCC's admission criteria set a GCP's liquid capital at HK$100 million, plus HK$20 million for each non-clearing participant beyond the fifth, up to HK$390 million (or its Financial Resources Rules requirement if higher). Exchange Participants are not automatically DCPs: they must sign a Participant Agreement and contribute to the Guarantee Fund. Exchange trades settle through CCASS, not bilaterally, and SEOCH clears stock options only. Source: HKEX 'Becoming a HKSCC Participant' (General Rules of HKSCC, Chapter 3), viewed October 2026 (as at October 2026).

Common mistake

Assuming an SEHK trading licence brings clearing rights. A non-clearing participant must appoint a GCP.

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Original study material mapped to the public HKSI Paper 1 syllabus. Unofficial, not endorsed by HKSI Institute or the SFC. Verify figures and rules against current guidance before relying on them.