Bond Connect Securities ready for Certain Repos & Collateral

On 13 January 2025, the Hong Kong Monetary Authority (HKMA) and the People's Bank of China (PBOC) unveiled a series of policy measures aimed at enhancing financial market connectivity between Hong Kong and Mainland China. Key initiatives include provisions for offshore RMB repo transactions and the use of Northbound Bond Connect bonds as eligible margin collateral for all OTC derivatives at OTC Clearing Hong Kong Limited. These much-anticipated measures have been positively received by the market.

Additional steps announced encompass the introduction of a RMB Trade Financing Liquidity Facility by the HKMA, improvements in settlement times and currencies for Southbound Bond Connect, the linking of faster payment systems between Mainland China and Hong Kong, and the provision for Hong Kong residents to open accounts through attestation services by additional participating banks. These initiatives are designed to bolster offshore RMB liquidity and solidify Hong Kong’s status as the preeminent global offshore RMB financial centre.