Cross-boundary bond repurchase business launched by HKMA, PBoC, and others to support offshore RMB liquidity and funding costs, complementing the offshore RMB repo business initiated in February.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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Today (26 September), the cross-boundary bond repurchase (repo) business, advocated by the Hong Kong Monetary Authority ("HKMA"), the People’s Bank of China ("PBoC"), the China Securities Regulatory Commission, and the State Administration of Foreign Exchange, was officially launched. This initiative seeks to enhance cross-border financial collaboration and liquidity support.
Relevant Mainland financial authorities/regulators have jointly issued the ‘Notice to Further Support Overseas Institutional Investors in Conducting Bond Repo Business in China’s Bond Market.’ Effective immediately, all overseas institutional investors already active in the onshore bond market, including Bond Connect participants, are now permitted to engage in onshore repo business and remit RMB liquidity for offshore use. This policy measure builds upon the previous offshore RMB repo business launched by the HKMA in February and aims to provide more stable liquidity support for Hong Kong’s offshore RMB market, thereby reducing RMB funding costs.
Mr. Eddie Yue, Chief Executive of the HKMA, underscored the significance of the launch, stating, 'We are pleased to initiate the cross-boundary repo business. This is a pivotal step in our ongoing collaboration with the PBoC to strengthen the Bond Connect business. The measure will bolster offshore RMB liquidity in Hong Kong, attract more overseas investors to RMB assets, and promote a more diversified development of offshore RMB businesses. Ultimately, this will help fortify Hong Kong’s standing as an international financial centre and a premier offshore RMB business hub.'
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