The Hong Kong dollar Clearing House Automated Transfer System (CHATS), which operates on a real-time gross settlement (RTGS) basis, is responsible for clearing all the Hong Kong dollar interbank payments. It has a direct link with the Central Moneymarkets Unit (CMU, the debt securities clearing and settlement system operated by the HKMA) to provide both real-time and end-of-day delivery-versus-payment settlement for transactions involving securities lodged with the CMU. Hong Kong Interbank Clearing Limited (HKICL), the system operator of Hong Kong dollar CHATS, was established in 1995 and is owned equally by the HKMA and the Hong Kong Association of Banks. In 2006, HKICL processed a daily average value of $579 billion in Hong Kong dollar CHATS transactions (around 18,000 items). On 27 October the system registered a record turnover of $1.37 trillion because of large initial public offering (IPO) activities.

In addition to settling large-value payments, Hong Kong dollar CHATS also handles daily bulk clearings for the money settlement of stock market transactions, cheques and auto-debit transactions, low-value bulk electronic payment items (EPS and auto-credit), and low-value ATM transfers (Chart 1). The system was expanded in October to process bulk settlement for credit card transactions, removing the settlement risk for payments between the card-issuing banks and the merchant-acquiring banks.

During the year, banks made good use of their Exchange Fund Bills and Notes to obtain interest-free intraday liquidity through intraday repurchase agreements with the HKMA to settle their interbank payments more efficiently. On average, intraday repurchase transactions amounting to $49 billion were carried out daily to facilitate payment flows, representing 49% of the $99 billion of Exchange Fund paper held by banks in December 2006.