The northbound trading of Swap Connect, a mutual market access program between the Chinese mainland and the Hong Kong Special Administrative Region (HKSAR) in the interbank interest rate swap markets, will
At the initial stage, eligible products will include interest rate swap contracts, and the quotation, transaction and settlement currency will be in renminbi (RMB), the HKMA said.
An agreement on the collaboration in developing Swap Connect was officially announced in July 2022 by the People's Bank of China (PBOC), the Hong Kong Securities and Futures Commission (SFC) and the HKMA to promote the collaborative development of financial derivatives markets in both the Chinese mainland and Hong Kong and establish a framework for high-quality financial opening-up.
The program will begin with northbound trading, allowing overseas investors from Hong Kong and other countries and regions to participate in the mainland interbank financial derivatives market through a connection between financial infrastructure institutions in the two markets.
The PBOC, the SFC and the HKMA have agreed on the principles and arrangements for cross-boundary regulatory cooperation relating to Swap Connect and have signed the Memorandum of Understanding on Matters relating to Bonds and Derivatives Markets in the Mainland and Hong Kong.
The memorandum has enhanced the regulatory collaboration arrangements and liaison mechanisms among the mainland and Hong Kong regulators for the bond and derivatives markets, to jointly maintain the normal operation of Swap Connect, financial market stability and fair and orderly trading.
