The Mainland-Hong Kong interest rate swap markets mutual access scheme, Swap Connect, has been expanded and enriched to enhance the flexibility for offshore institutional investors and attract more offshore investors. As of April 2025, 12,000 transactions with an aggregate notional amount of RMB 6.5 trillion have been completed. The People's Bank of China ("PBoC"), the Securities and Futures Commission ("SFC"), and the Hong Kong Monetary Authority ("HKMA") plan to extend interest rate swap contracts to 30 years and include LPR as a reference rate. These enhancements are aimed at facilitating the high-quality opening-up of Mainland's financial markets and promoting RMB internationalisation.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
SPOTLIGHT ON
FAMILY OFFICES
As of May 15, 2025, Swap Connect underwent significant enhancements to offer offshore institutional investors greater flexibility in managing interest rate risk and to increase the attractiveness of RMB assets to offshore investors.
By the end of April 2025, 99 participants—comprising 20 Mainland dealers and 79 offshore investors—had joined Swap Connect, executing more than 12,000 interest rate swap transactions with an aggregate notional value of approximately RMB 6.5 trillion.
The People's Bank of China ("PBoC"), the Securities and Futures Commission ("SFC"), and the Hong Kong Monetary Authority ("HKMA") are committed to expanding the product offerings under Swap Connect, including extending interest rate swap contract tenors to 30 years and introducing contracts that use the Loan Prime Rate ("LPR") as the reference rate. These expansions will cater to the diverse risk management needs of market participants and further the internationalization of the RMB.
Infrastructure operators in both Mainland and Hong Kong will gradually implement these enhancement measures. Regulatory authorities in both jurisdictions will continue to provide guidance to financial market infrastructure operators to further bolster relevant arrangements.
These initiatives are aimed at steadily advancing the opening-up of Mainland financial markets, fostering the internationalization of the RMB in a controlled and progressive manner, and supporting Hong Kong's growth as an international financial center.
View the full article:Source
