MNI BRIEF: Swap Connect To Strengthen Hong Kong's Hub Status

The launch of Swap Connect will open China’s financial derivatives market, enhances the role of Hong Kong as a connection to the Mainland for international investors and strengthen the yuan’s global status, according to the People’s Bank of China and the Hong Kong Government.

Northbound Swap Connect, the first derivatives market access programme for international investors to trade and clear onshore yuan interest rate swaps (see: MNI: China Seen Boosting Swap Connect As CNY Bond Demand Grows), saw 37 transactions worth CNY1.8 billion in contracts within half an hour of launch on Monday, officials said at the launch ceremony Monday. JPMorgan, BNP Paribas, Standard Chartered and Citigroup were among some of the institutions to complete their first trade with Chinese counterparties.

Pan Gongsheng, deputy-governor of the PBOC, said the initiative provides overseas investors with access to a hedging tool for investing in the China Interbank Bond Market (CIBM). “(Swap Connect) fully reflects China central government’s emphasis on consolidating and enhancing Hong Kong's status as an international financial center,” Pan said. The PBOC will continue to deepen practical cooperation with Hong Kong and promote opening up and high-quality development of China's financial market, he noted.