Hong Kong Exchanges and Clearing Limited (HKEX) announces that its clearing subsidiary, OTC Clearing Hong Kong Limited (OTC Clear), will allow offshore investors to use China Government Bonds and Policy Bank Bonds held through Bond Connect as collateral for Northbound Swap Connect beginning 13 January 2025.

The new eligible collateral can be used to cover initial margin requirements of Northbound Swap Connect, providing greater flexibility to international investors and enhancing their capital efficiency. It will also help vitalise international investors’ bond holdings in the China Interbank Bond Market, promoting the internationalisation of the RMB.

Swap Connect, which links the Hong Kong and Mainland China interbank interest rate swap markets, has seen smooth operations and steady growth in trading volume since its launch in May 2023, adding vibrancy to the region’s financial markets.

As of the end of November 2024, a total of 71 overseas institutions have participated in Northbound Swap Connect. The average daily turnover of Swap Connect totalled RMB 18.2 billion in November 2024, up sharply from about RMB 3 billion in May 2023.