Hong Kong Exchanges and Clearing Limited (HKEX) welcomes the announcement today (Monday) from the Securities and Futures Commission (SFC), the Hong Kong Monetary Authority (HKMA) and the People's Bank of China to allow China Government Bonds (CGB) and Policy Bank Bonds held by international investors through Bond Connect as margin collateral for all OTC derivative transactions cleared by OTC Clear, HKEX's clearing subsidiary.
OTC Clear, which began accepting these instruments as margin collateral for Northbound Swap Connect from today, will also be accepting them as margin collateral for other derivative transactions by the end of the first quarter of 2025. OTC Clear will work closely with the SFC and the Central Moneymarkets Unit (CMU) of the HKMA to prepare for this arrangement. More details will be announced in due course.
The use of CGB and Policy Bank Bonds as collateral for a wider range of derivative transactions will enhance the utility of RMB-denominated assets in the market, promoting the internationalisation of the RMB.
OTC Clear provides clearing services for interest rate swaps (including China onshore interest rate swaps via Swap Connect), non-deliverable currency forwards, cross currency swaps and deliverable FX.
