The interest rate of the Mainland and Hong Kong is "swapped", and it is officially launched after 6 months of planning

On July 4, Capital State learned that the central bank's official website announced this morning that in order to promote the common development of the financial derivative market in the Mainland and Hong Kong, on July 4, 2022, the People's Bank of China, Hong Kong Securities and Futures Affairs Supervision Committee (hereinafter referred to as Hong Kong CSRC), Hong Kong Financial Administration (hereinafter referred to as the Hong Kong Financial Management Bureau) issued a joint announcement to conduct the interconnection and cooperation of the interest rate exchange market and the mainland interest rate exchange market (hereinafter referred to as the "swap").

Figure source: central bank official website

The background of the launch of the "interchange" is that in recent years, the degree of opening up in my country's interbank bond market has continued to deepen, and the demand for overseas investors in the management of RMB interest rate risk has continued to increase. Since 2017, the "Bond Tong" north -south has been launched, which has become an important milestone for China's financial market to open to the outside world. In 2021, foreign investors reached RMB 11.47 trillion. As of the end of 2021, foreign investors holding RMB bonds reached 4 trillion yuan, accounting for about 3.5%of the total number of custody in the market.

The "swap" business is connected through the financial market infrastructure of the two places, optimizing the existing process with electronic transactions and central opponents' clearing as its core, improving the efficiency of transaction liquidation, so that domestic and foreign investors can not change the trading habits without changing the trading habits. Under the premise of the relevant market laws and regulations of the two places, the transactions and centralized liquidation of the RMB interest rate exchange is convenient to complete the RMB interest rate exchange transaction, which is not only conducive to investors' management interest rate risks, but also to consolidate Hong Kong's international financial center status.

The announcement also disclosed the launch time, and the "interchange" will be promoted steadily and orderly under the overall planning and deployment of my country's financial market. The People's Bank of China will jointly formulate institutional methods with the Hong Kong Securities Regulatory Commission, the Hong Kong HKMA and other departments, strengthen supervision and cooperation and information sharing, and guide relevant infrastructure to do a good job of "interchange" rules, business, and technology, and strengthen market communication. With cultivation and 6 months from now, "Convection" was officially launched.

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