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HKSAR Government welcomes establishment of Swap Connect
     The People's Bank of China, the Securities and Futures Commission and the Hong Kong Monetary Authority issued a joint announcement today (July 4) on their approval for the specified Mainland and Hong Kong financial institutions to collaborate in establishing mutual access arrangements between the interest rate swap markets of the two places (Swap Connect). The Hong Kong Special Administrative Region (HKSAR) Government welcomes the decision.

     The Chief Executive, Mr John Lee, said, "Swap Connect marks another milestone in the integration of the Mainland and Hong Kong financial markets. It will, for the first time, introduce mutual access in the realm of financial derivatives products, enhancing the comprehensiveness of the product suit trading under the mutual market access schemes. I am most grateful to the Central People's Government for announcing the initiative at the beginning of the new-term Government, which will bolster investors' confidence in our country's steadfast support to the development of Hong Kong as an international financial centre. The implementation of the initiative will further support Hong Kong in strengthening its functions as a global offshore Renminbi (RMB) business hub and a risk management centre in response to the targets laid down in the National 14th Five-Year Plan, while contributing to the high-quality opening up of the Mainland capital market."

     The Financial Secretary, Mr Paul Chan, said, "Swap Connect will help drive forward the development of derivatives markets in the Mainland and Hong Kong, offering more diverse risk management tool options to investors and enhancing the ecosystem for derivatives products of the two places. It will also be conducive to the development of Hong Kong's offshore RMB market, thereby further consolidating Hong Kong's status as an international financial centre and a global offshore RMB business hub. I would like to express my gratitude to the Central People's Government and relevant authorities for their strong support, and the institutions in the Mainland and Hong Kong for their efforts in taking forward the initiative."

     Northbound trading will be launched first in the initial phase of Swap Connect, allowing Hong Kong and other overseas investors to participate in the Mainland's interbank derivatives market through arrangements in trading, clearing, settlement, etc between the specified institutions in Hong Kong and the Mainland. Southbound trading will be explored in due course, with the aim to allow Mainland investors to participate in Hong Kong's derivatives market through mutual access arrangements between specified institutions of the two places.

     According to the joint announcement, Swap Connect will be formally launched after the completion of the necessary preparatory work, including finalising the relevant rules and system development, as well as obtaining relevant regulatory approvals.
Ends/Monday, July 4, 2022
Issued at HKT 9:15
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