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Swap Connect between Hong Kong, mainland officially launched

The trading of Swap Connect, an interest rate swap market access scheme, was officially launched on Monday, according to the People’s Bank of China (PBOC).

Under the program, domestic and overseas investors will be allowed to conduct renminbi interest rate swap trading and clearing via infrastructure institutions in the Chinese mainland and the Hong Kong Special Administrative Region (HKSAR), the PBOC said in an online statement.

With institutional arrangements made in trading, clearing and settlement, investors will be able to participate in financial derivatives markets on the mainland and in HKSAR without changing their existing trading practices, the central bank said.

The rollout of the scheme marked an important step in China’s financial opening-up and reflected the firm determination of the Chinese central government to support the long-term prosperity, stability and development of the HKSAR, said Pan Gongsheng, deputy governor of the PBOC, while addressing the launching ceremony.

The Swap Connect will consolidate and improve Hong Kong’s status as an international financial center, provide a more convenient channel to manage interest rate risks, and steadily promote China’s financial opening-up, the central bank said.

To ensure the smooth running of the program, the PBOC has also worked with Hong Kong Securities and Futures Commission and the Hong Kong Monetary Authority to strengthen regulation and improve liaison and negotiation mechanisms.

Based on the operation of the scheme, operational arrangements will be further fine-tuned, the central bank said.

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