Northbound Swap Connect starts May 15 in first stage of mutual access between Hong Kong and mainland interest rate swap markets
- The northbound trading of Swap Connect will help global investors to participate in the mainland interbank financial derivatives market
- Experts said Swap Connect can create ‘synergies with Bond Connect’ and cement Hong Kong’s ‘role as a super-connector’
The later-than-expected commencement of mutual access between the mainland and Hong Kong interest rate swap markets will get under way in 10 days, allowing outside investors to trade mainland interest rate swap contracts and hedge 3.7 trillion yuan of (US$552 billion) Chinese bond risk.
The northbound trading of Swap Connect will launch on May 15, helping global investors to participate in the mainland interbank financial derivatives market through the scheme, according to a statement from the Hong Kong Monetary Authority (HKMA) on Friday.
HSBC, Standard Chartered, Hong Kong Exchanges and Clearing and Bank of China (Hong Kong) all heralded this first stage of Swap Connect.
“Hong Kong’s unique links to mainland China’s financial markets continue to widen and deepen,” said Monish Tahilramani, head of markets and securities services Asia-Pacific at HSBC.
“By expanding access channels to cover derivatives, Swap Connect will support international investors to better manage their exposure to fluctuations in interest rates and enrich risk-management tools for RMB-denominated fixed-income assets,” added Tahilramani.
HSBC will take part in the northbound trading of Swap Connect “as an important complement to Bond Connect and a positive sign that onshore markets continue to open up”, said Tahilramani.
