HKEX confirms date for new collateral options
20 March 2025 Hong Kong
Image: lena_serditova/stock.adobe.com
Foreign investors can now use Chinese government bonds (CGBs) and policy bank bonds through Bond Connect as margin collateral, says Hong Kong Exchanges and Clearing (HKEX).
This will apply to all derivative transactions cleared by OTC Clearing Hong Kong from 21 March.
Glenda So, head of platform and market structure development at HKEX, says: “This initiative will provide greater flexibility to international investors and improve their capital efficiency, further enhancing the attractiveness of renminbi denominated assets and 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.
Since January, CGBs and policy bank bonds have already been permitted to cover initial margin requirements for Northbound Swap Connect transactions.
It comes as part of new policy measures introduced by the HKMA and the People's Bank of China, with the aim to deepen the financial market connectivity between the two entities.
This will apply to all derivative transactions cleared by OTC Clearing Hong Kong from 21 March.
Glenda So, head of platform and market structure development at HKEX, says: “This initiative will provide greater flexibility to international investors and improve their capital efficiency, further enhancing the attractiveness of renminbi denominated assets and 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.
Since January, CGBs and policy bank bonds have already been permitted to cover initial margin requirements for Northbound Swap Connect transactions.
It comes as part of new policy measures introduced by the HKMA and the People's Bank of China, with the aim to deepen the financial market connectivity between the two entities.
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