Swap Connect between Chinese mainland, Hong Kong to expand financial market access

Source: Xinhua / Updated: 2022-07-27

Regulators on Monday announced the development of Swap Connect, a new mutual market access program between the Chinese mainland and the Hong Kong Special Administrative Region in the interbank interest rate swap markets.

The People's Bank of China (PBOC), the Securities and Futures Commission (SFC), and the Hong Kong Monetary Authority jointly announced that OTC Clearing Hong Kong Limited (OTC Clear), China Foreign Exchange Trade System (National Interbank Funding Center) and Shanghai Clearing House are working to develop Swap Connect.

Swap Connect would enable investors to execute interest rate derivatives transactions to manage interest rate risks, said Pan Gongsheng, deputy governor of the PBOC.

In its initial stage, Swap Connect will allow Hong Kong and international investors to participate in the Chinese mainland's interbank interest rate swap market, without changing their existing trading and settlement practices, according to the Hong Kong Exchanges and Clearing Limited, which is participating in the building of the program through its clearing subsidiary OTC Clear.

Building on the success of Stock Connect, mutual market access between the mainland and Hong Kong has gradually expanded to other channels, said Ashley Alder, the SFC's Chief Executive Officer.

The launch of Swap Connect is subject to regulatory approvals, market readiness, and the completion of operational arrangements. Implementation details and the official launch date will be announced in due course, according to the SFC.