New Measures to Support the Development of Hong Kong’s Fixed Income and Currency Market and Offshore RMB Business

Joint Regulatory Announcement on Financial Cooperation and Market Development

On Tue, 07 Jul, the Hong Kong Monetary Authority ("HKMA"), the People’s Bank of China ("PBoC") and the Securities and Futures Commission ("SFC") announced new measures to deepen financial cooperation between Hong Kong and the Chinese Mainland, support the development of Hong Kong’s fixed income and currency ("FIC") market and offshore RMB business, and reinforce Hong Kong’s position as an international financial centre. These measures include supporting the collaboration of financial infrastructure institutions to develop a Hong Kong FIC electronic trading platform, further enhancing and expanding the Southbound Bond Connect by increasing the annual investment quota, developing bond repurchase (repo) business using Southbound Bond Connect bonds as collateral, expanding the product scope to cover products with HKD bonds and RMB bonds as underlying assets, connecting to the Macao bond market, and enhancing the management of Southbound Bond Connect market makers. Additionally, the measures support the inclusion of onshore bonds issued by the Ministry of Finance and Mainland policy banks held under Northbound Bond Connect as eligible margin collateral at the HKFE Clearing Corporation and the SEHK Options Clearing House, enhance the Northbound Bond Connect operational arrangement to extend the settlement time and improve efficiency, further enhance the Swap Connect to include the interbank 7-Day Fixing Depository-Institutions Repo Rate ("FDR007") as a reference rate, and support the launch of Hong Kong Exchanges and Clearing Limited 5-Year China Government Bond Futures in Hong Kong on 3 August.

Offshore RMB Market Support Initiatives

Building on this, the HKMA announced five measures to support the development of the offshore RMB market and strengthen Hong Kong’s role as a leading offshore RMB business hub, thereby enabling greater outreach to other regions and enhancing support for the real economy. Underpinned by strong support from the PBoC and addressing industry suggestions, these measures include increasing the size of the HKMA’s RMB Business Facility from RMB200 billion to RMB500 billion and extending tenors to include 9-month, 2-year and 3-year, effective on 10 July 2026. The authorities are also exploring to introduce a tendering mechanism of 7-day offshore RMB liquidity, exploring the issuance of offshore RMB short-term debt instruments to support the building of the offshore RMB yield curve, promoting the development of a bilateral currency transaction framework between Indonesian Rupiah and offshore RMB, and issuing good practices to banks to promote RMB adoption.

Regulatory Commentary and Implementation Commitment

Mr Eddie Yue, Chief Executive of the HKMA, stated that the series of measures will further deepen cross-boundary financial cooperation, strengthen financial market connectivity between Hong Kong and the Chinese Mainland, promote the development of Hong Kong’s fixed income and currency market, and reinforce Hong Kong’s position as an offshore RMB business hub and international financial centre. These measures are the result of concerted efforts of the HKMA, the PBoC and other relevant financial regulatory authorities in Hong Kong and on the Chinese Mainland. The HKMA will continue to work closely with the relevant regulatory authorities, the industry and financial infrastructure institutions to ensure timely and smooth implementation of the measures, and explore further enhancements.