The Securities and Futures Commission (SFC), the People’s Bank of China and the Hong Kong Monetary Authority today jointly announced that OTC Clearing Hong Kong Limited, China Foreign Exchange Trade System (National Interbank Funding Center) and Shanghai Clearing House are working to develop Swap Connect, a new mutual market access programme.
Swap Connect would enable offshore investors to execute interest rate derivatives transactions with onshore investors in Mainland China. This would be an effective way for offshore investors to manage interest rate risks arising from investments in the Mainland bond market. According to the joint announcement, the northbound link will be introduced first.
“Building on the success of Stock Connect, mutual market access between the Mainland and Hong Kong has gradually expanded to other channels,” said Mr Ashley Alder, the SFC’s Chief Executive Officer. “The extension of market access to over-the-counter derivatives through Swap Connect will be another milestone, enabling global investors to participate more broadly in the vast Mainland bond market.”
The launch of Swap Connect is subject to regulatory approvals, market readiness and the completion of operational arrangements. Implementation details and the official launch date will be announced in due course.
