The Clearing & Settlement Systems Ordinance will strengthen Hong Kong's financial infrastructure, providing legal certainty to transactions cleared and settled through designated systems.

Monetary Authority Chief Executive Joseph Yam said it will pave the way for the admission of the Hong Kong dollar into the Continuous Linked Settlement System, a global clearing and settlement system for cross-boundary foreign exchange transactions.

Endorsed today by legislators, the ordinance establishes a statutory regime for the authority to designate and oversee clearing and settlement systems material to Hong Kong's monetary and financial stability or to the city's functioning as an international finance centre.

It provides statutory backing to the settlement finality of those transactions effected through such designated systems by protecting the settlement finality from insolvency and other laws.

The authority will issue a certificate of finality to those designated systems meeting the safety and efficiency requirements specified in the ordinance.

Mr Yam said it will perform its role as an overseer of designated systems to ensure the systems are operated in a safe and efficient manner. It will also ensure the designated systems are sufficiently robust in supporting the domestic and cross-boundary financial activities here.