The Hong Kong Monetary Authority (HKMA) announced today that it has designated nine authorized institutions as Primary Liquidity Providers (PLPs) for offshore renminbi (RMB) market in Hong Kong (i.e. CNH market).
The designation is for a term of two years with effect from October 27, 2020. It follows the expiry of the institutions’ current 2-year term of designation.
The nine PLPs are:
- Agricultural Bank of China Limited
- Bank of China (Hong Kong) Limited
- Bank of Communications Co., Ltd.
- BNP Paribas
- China Construction Bank (Asia) Corporation Limited
- Citibank, N.A.
- Hongkong and Shanghai Banking Corporation Limited, The
- Industrial and Commercial Bank of China (Asia) Limited
- Standard Chartered Bank (Hong Kong) Limited
The HKMA says it has reviewed the performance of these nine PLPs over the past two years, and considers that they are all active participants in the CNH market, and have been performing their PLP roles effectively. The HKMA will continue to provide each of the PLPs with a dedicated RMB repo facility of RMB2 billion, so as to facilitate their liquidity management when they carry out market-making activities and provide liquidity in the CNH market.
The HKMA will also continue to regularly review the experience in operating the scheme.
The RMB Liquidity Facility was introduced in June 2012 to address potential short-term liquidity tightness in the offshore RMB market. In the light of experience in operating the facility and developments in the offshore RMB market, the HKMA has made various refinements to the facility over the years.
In October 2014, the HKMA introduced the Primary Liquidity Providers (PLP) scheme. Nine banks were designated as the PLPs which pledged to expand their market-making activities in Hong Kong for various offshore RMB instruments, and use the Hong Kong platform in promoting their global offshore RMB business.
In return, the HKMA provides a dedicated repo facility of RMB2 billion to each of the PLPs so as to facilitate their liquidity management when carrying out more market-making and other business activities in the offshore RMB market. The PLPs can obtain intraday or overnight RMB funds from the HKMA under the repo facility, which are subject to the same terms and conditions as those of the RMB Liquidity Facility.