Features
CHATS, like other RTGS systems, settles payment transactions on a "real time" and "gross" basis—payments are not subjected to any waiting period and each transaction is settled in a one-to-one manner such that it is not bunched with other transactions. It is a single-tier system where participants settle with one central clearing house. Payments are final, irrevocable, and settled immediately if there is sufficient funds in the participant's settlement account with the clearing house. Daylight overdraft is not offered in CHATS; payments that cannot be settled due to insufficient funds are queued. Banks are able to alter, cancel, and re-sequence payments in their queues.
Since no daylight overdraft is offered, in order for banks to avoid having to maintain large balances in their settlement accounts, which accrue no interest, so that payments are processed as soon as possible, interest-free intraday liquidity may be obtained by the banks through repurchase agreements (repos). Intraday repos that are not reversed at the end of the business day are carried into overnight borrowing.
Banks access CHATS by connecting to it via Member Bank Terminals which are provided by Hong Kong Interbank Clearing Limited. They may also develop their own software to access the CHATS terminal system provided that their software follow CHATS messaging format and protocol.
Read more about this topic: Clearing House Automated Transfer System
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