BEIJING, Jan. 14 (Xinhua) -- Securities and Futures Commission (SFC), the local securities regulator in Hong Kong Special Administrative Region, welcomed OTC Clearing Hong Kong Limited (OTC Clear) starting accepting certain onshore Renminbi-denominated bonds as margin collateral for northbound Swap Connect transactions from Monday, reported Securities Times.
According to SFC, the move involves onshore RMB bonds issued by China's Ministry of Finance and Chinese policy banks, referred altogether herein as Chinese government bonds (CGB), that are held under the northbound Bond Connect by offshore investors.
Global institutional investors can benefit from further reduction in liquidity cost with more efficient use of their onshore RMB bonds as non-cash collateral when clearing with OTC Clear, noted Rico Leung, SFC's executive director of Supervision of Markets.
Details of the new arrangement, which is subject to regulatory review, will be announced in due course, according to SFC.
OTC Clear is a central counterparty established by Hong Kong Exchanges and Clearing Limited for the purpose of providing clearing and settlement services for over the counter (OTC) derivative transactions.
Swap Connect is a mutual access scheme between the interest rate swap markets of Chinese mainland and Hong Kong Special Administrative Region and in May 2023, northbound trading under the Swap Connect formally kicked off.
(Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)
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