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Hong Kong Exchanges and Clearing Limited (HKEX) today (Monday) celebrated the launch of Swap Connect, the new mutual access programme between Hong Kong and Mainland China’s interbank interest rate swap markets, with a ceremony held at HKEX Connect Hall and in Beijing. HKEX, through its clearing subsidiary OTC Clear, has been working with China Foreign Exchange Trade System (CFETS) and Shanghai Clearing House (SHCH) to support the trading and clearing of Swap Connect, which is launching initially with a Northbound channel.
Hong Kong Chief Executive John Lee, Deputy Governor of the People’s Bank of China (PBOC) Pan Gongsheng, Deputy Director of the Hong Kong and Macau Affairs Office of the State Council (HKMAO) Wang Linggui, Hong Kong Securities and Futures Commission (SFC) Chief Executive Officer Julia Leung, and Hong Kong Monetary Authority Chief Executive Eddie Yue delivered speeches at the celebration event. Deputy Director of the Liaison Office of the Central People's Government in Hong Kong SAR Yin Zonghua, Hong Kong Financial Secretary Paul Chan, Hong Kong Secretary for Financial Services and the Treasury Christopher Hui, along with representatives from the State Council, CFETS, SHCH, HKEX and other market institutions were also in attendance.
Swap Connect is the latest development in the pioneering Connect Programme and has been warmly welcomed by regional and international investors. On the first day of the programme’s launch, 27 offshore investors traded onshore Renmenbi (RMB) interest rate swaps with a notional value exceeding RMB8,259 million.
The launch of Bond Connect in 2017, part of the broader Connect programme, was an important first milestone in the opening of the Mainland bond market. This marked the beginning of even closer cooperation between Mainland China and Hong Kong’s fixed-income markets. Since that time, international investors’ onshore bond holdings have grown steadily from RMB0.8 trillion in June 2017 to RMB3.4 trillion in December 2022. Swap Connect is the next step in the evolution of this transformative programme of connectivity.
Providing enhanced risk management capabilities, Swap Connect will facilitate greater international participation in China’s fixed-income market. This, in turn, will further strengthen Hong Kong’s position as a leading international financial centre, as well as propelling the expansion of the Chinese bond market and the internationalisation of the RMB.
