Regulators in China and Hong Kong Announced the Development of Swap Connect
The People's Bank of China
Securities and Futures Commission of Hong Kong
Hongkong Monetary Authority
DATE OF ISSUANCE:
July 4, 2022
DATE OF EFFECTIVENESS:
January 4, 2023
The People's Bank of China, Securities and Futures Commission of Hong Kong, and Hong Kong Monetary Authority have launched a joint mutual access program between Hong Kong and the Mainland in respect of interest rate swap market access ("Swap Connect"), which will take effect after six months from the date of this announcement.
"Swap Connect" refers to an arrangement which will enable investors to participate in the financial derivatives markets in the Mainland and Hong Kong through a connection between Infrastructure Institutions in both places. Swap Connect consists of northbound trading and southbound trading. In the initial phase, northbound trading will commence first, Hong Kong and global investors may participate more broadly in the mainland interbank financial derivatives market, without changing their existing trading and settlement practices. Southbound trading, which will provide Mainland investors with a convenient, efficient and secure channel to allocate their assets through Hong Kong financial derivatives market flexibly, will be introduced in due course depending on the market situation.