Official Launch of Northbound Trading of Swap Connect

Following the most recent publication by the Securities and Futures Commission of Hong Kong (SFC) on May 5, 2023 to inform of some relevant details of new Northbound trading under the SWAP Connect scheme (please see EventID 21136 in this context for more information), the Hong Kong Monetary Authority (HKMA) has now published a press statement in this context. Therein, the Authority informs that Northbound trading has now come into operation on May 15, 2023.
Northbound Trading under the Swap Connect scheme enables international investors to trade interest rate swap products in Mainland China through a connection between financial institutions in Hong Kong and Mainland China. The scheme’s key objective is to facilitate the management of interest rate risks for global investors who have invested in Mainland bonds. The Chief Executive of the HKMA, Mr Eddie Yue, stated that this initiative is a significant milestone in the financial cooperation between Hong Kong and Mainland China. It will create favorable conditions for global investors to increase their involvement in the onshore bond market and contribute to the recognition and confidence in RMB bonds internationally. Northbound Trading under Swap Connect also provides new opportunities for Hong Kong’s financial institutions, strengthens Hong Kong’s position as a global risk management center and as an offshore RMB hub. The HKMA will collaborate with relevant regulators from both Hong Kong and Mainland China to closely monitor the implementation of the scheme and make operational adjustments based on market developments and investor requirements. Additionally, the HKMA will continue to discuss with Mainland authorities the introduction of more diverse risk management tools for international investors.
Please note that the SFC has made a similar publication on May 15, 2023, which may be found here.