The Hong Kong Exchanges and Clearing Limited (HKEX) and the Hong Kong Monetary Authority (HKMA) have jointly announced a pilot program to explore new digital payment solutions for the after-hours trading session of the derivatives market.

This initiative is designed to enhance the Hong Kong capital market and address the increasing market demand for after-hours trading. The project will study the use of "Digital Hong Kong Dollar," a wholesale-level Central Bank Digital Currency (CBDC) operating 24/7, for making pre-paid margin payments during the after-hours session.

The goal is to improve risk management capabilities for the derivatives market outside standard banking hours while keeping the existing operational workflow unchanged. Compared to current pre-paid margin arrangements, the pilot is expected to offer greater flexibility and efficiency.

Under the present system, clearing participants must submit applications to HKFE Clearing Corporation Limited (HKCC) by 3:00 PM for funds to be available for the subsequent after-hours trading session.

HKEX is now inviting clearing participants under HKCC to take part in a voluntary trial involving real transactions. The broader application of the trial and the proposed solution will depend on regulatory approvals, market readiness, and other relevant factors.

The Chief Operating Officer of HKEX stated that the exchange is pleased to collaborate with the HKMA on this latest effort to further enhance the capital market infrastructure. By exploring the use of a CBDC, the aim is to provide more flexible and timely payment options outside regular business hours, addressing long-standing operational challenges faced by the industry.

She noted that this pilot project reflects the shared commitment of HKEX and the HKMA to foster innovation and strengthen market resilience, thereby helping to consolidate Hong Kong's position as a leading international financial center.

The Deputy Chief Executive of the HKMA commented that as Hong Kong's financial infrastructure evolves to meet growing market needs, the authority is dedicated to promoting innovation to improve efficiency and resilience.

He added that this joint pilot with HKEX, which introduces the "Digital Hong Kong Dollar" for pre-paid margin payments in the after-hours session, not only demonstrates the application of a wholesale CBDC in a real market environment but also highlights the close collaborative relationship with industry stakeholders in driving financial innovation.