Participants attend a ceremony held by Hong Kong Exchanges and Clearing Limited to launch the "northbound" mainland-Hong Kong bond connect in Hong Kong, south China, July 3, 2017. With the northbound trading kicking off after the ceremony, qualified overseas investors are able to invest in the Chinese mainland interbank bond market via the mainland-Hong Kong bond connect program. (Xinhua/Wang Shen)
BEIJING, Sept. 25 (Xinhua) – China Foreign Exchange Trade System (CFETS) optimized settlement-related rules for foreign institutions taking part in Northbound trading of the Chinese mainland-HK mutual market access scheme Bond Connect, reported Xinhua Finance, a Xinhua-run financial information platform Thursday.
CFETS said in an announcement that foreign institutional investors participating in Northbound trading of the Bond Connect can conduct related transactions directly with settlement banks in Hong Kong after records filing with CFETS. CFETS is a major global trading platform and pricing center for Renminbi (RMB) and related products, directly affiliated to the Chinese central bank.
Northbound trading allows foreign institutions to trade bonds on the interbank bond market in Chinese mainland through Bond Connect, a joint venture established by CFETS and Hong Kong Exchanges and Clearing Limited (HKEX).
For each foreign institutional investor participating in Northbound trading, it can select no more than three settlement banks in Hong Kong to deal with related fund remittance and foreign exchange risk hedging business.
Regarding record filing with CFETS, foreign institutional participants of Northbound trading are required to designate one settlement bank as their master settlement banks in Hong Kong and others as general settlement banks before conducting related business. Adjustment of Hong Kong settlement banks by such foreign institutions shall be reported to CFETS within three business days for adjusting recording filing.
Foreign institutions participating in Northbound trading can also complete fund remittance and foreign exchange risk hedging business at their master Hong Kong settlement banks and general settlement banks through corresponding bond holders.
They are required however to open RMB fund accounts only with one master settlement bank in Hong Kong and related RMB fund transfer and settlement needs shall be conducted by their master settlement banks in Hong Kong. (Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)
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