China, Hong Kong to launch interest rate swap to enhance financial integration
Beijing also upgrades currency swap deal with Hong Kong, expanding its size to $119.4B, up from $74.7B
Mainland China and Hong Kong have decided to launch a new “Swap Connect” program after six months, allowing mutual access to interest rate swap trading.
The move aims to promote the development of financial derivatives markets in both China and Hong Kong, according to a joint statement from the People’s Bank of China (PBoC), the Hong Kong Securities and Futures Commission and the Hong Kong Monetary Authority on Monday.
The deal, signed during the 25th anniversary of Hong Kong’s return to the motherland, will enable offshore investors in Hong Kong to participate in mainland interbank financial derivatives markets.
Southbound Trading, which will commence later, will allow mainland investors to access the Hong Kong financial derivatives market through mutual access.
Separately, the PBoC also said on Monday that it has upgraded the existing separate currency swap facility with Hong Kong and expanded its size to 800 billion yuan ($119.4 billion) from 500 billion yuan ($74.65 billion).