"Swap" is here, officially launched after 6 months!

Wen | Liu Qi

On July 4, the People's Bank of China released the news that in order to promote the common development of the financial derivative market in the Mainland and Hong Kong, the People's Bank of China, the Hong Kong Securities and Futures Affairs Supervision Committee (hereinafter referred to as the "Hong Kong Securities Regulatory Commission"), the Hong Kong Financial Administration (below below Called "Hong Kong HKMA") decided to agree to the China Foreign Exchange Trading Center (National Bank of China Interbank Borrowing Center), the Interbank Market Clear Institute Co., Ltd. and Hong Kong Overseas Settlement Co., Ltd. to carry out the interconnection of Hong Kong and the Mainland interest rate exchange market (below Called "swap"). Photo source: The relevant person in charge of the central bank website said when answering the reporter that "interchange" will continue to advance under the overall planning and deployment of my country's financial market opening. At present, the People's Bank of China will jointly formulate institutional methods with the Hong Kong Securities Regulatory Commission, Hong Kong HKMA and other departments, strengthen supervision and cooperation and information sharing, guide relevant financial market infrastructure to prepare for rules, business, and technology, and strengthen market communication and cultivation , Guide market members to prepare before the transaction, and go online after 6 months. The demand for overseas investors to use derivatives to manage interest rate risks has continued to increase in recent years. In recent years, my country's interbank bond market has continued to increase to the outside world. Especially since 2017, the "Bond Tong" north -south has successively launched, becoming the Chinese financial market outside the outside world. An important milestone of openness. 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. According to the relevant person in charge of the aforementioned above, as overseas investors' debt holdings have expanded and transaction activity rises, the demand for the risk of derivatives management interest rates has continued to increase. "From the perspective of the inter -bank derivative market, since the launch of the interbank market in 2006, the RMB interest rate exchange has been the main variety. After years of steady and healthy development, the transaction scale has gradually expanded, the participation of the subject is increasingly enriched, and the risk management functions have been effective. In 2021, the transaction was 21.1 trillion yuan. "The person in charge said that in order to further facilitate foreign investors to participate in derivatives such as interchanged interest rate swaps in banks, the People's Bank of China continued to promote the steadily opening up of the inter -bank interest rate derivative market and used the mainland and Hong Kong places. The financial market is a good foundation for cooperation, and adopts a "bond" financial market infrastructure connection method, allowing foreign investors to participate in the domestic RMB interest rate exchange market through the interconnection of the electronic trading platforms and the central rival clearing institution through domestic and foreign electronic trading platforms and central rival clearing institutions. The launch of "swap and communication" has three positive significance. When talking about the positive significance of the launch of the "swap", the relevant person in charge answered the reporter and said: First, it is conducive to the risk of the management interest rate of overseas investors. The launch of the "SCT" can facilitate the management risk of interest rate interchange between foreign investors, reducing the impact of interest rate fluctuations on the value of bonds, cross -border flow of funds, and further promoting the internationalization of the RMB. Second, it is conducive to promoting the development of the domestic interest rate derivative market. After the launch of the "interchange", overseas institutions have increased their differentiated demand, supplemented by the advantages of high -efficiency electronic transactions and closely connected transactions, etc., helping to improve market liquidity, promote the market interest rate derivative market for further bank interest rate derivatives market Development and form a virtuous cycle. Third, it is conducive to consolidating the status of Hong Kong's international financial center. As an important measure for my country's financial derivative market to open to the outside world, the launch of "Conversion" is the specific implementation of the "14th Five -Year Plan" plan to strengthen the function of Hong Kong International Asset Management Center and Risk Management Center, which is conducive to enhancing Hong Kong as an international financial financial as an international financial financial The attractiveness of the center deepen the cooperation between the Mainland and the Hong Kong financial market. It is worth noting that under the current framework of the current interbank derivatives marketing, on the basis of adhering to the development path of the current inter -bank derivative market, the "interchange" comprehensively draws on the mature experience and overall framework of the bond market opening to the outside world to dock The latest development trend of the overseas derivative market has optimized the existing process with electronic transactions and central opponents' clearing as its core, and improved transaction liquidation efficiency. According to the aforementioned person in charge, under the "swap", investors at home and abroad can conduct transactions through the connection of relevant electronic trading platforms without changing the trading habits. At the same time, the "SCT Tong" innovates the interconnection mode of the derivative clearing institution, and the two central opponents will provide central and foreign investors with centralized liquidation services for RMB interest rate swaps. Investors at home and abroad can easily complete the transactions and centralized liquidation of RMB interest rate exchange on the premise of complying with market laws and regulations of the two places. The aforementioned person in charge adopted three major risk measures stated that effective prevention of risk is the basis for the high -quality development of the financial derivative market and the core principle that we adhere to the "interchange" work. Under the "swap", the following measures are mainly adopted: First, to ensure the order of transaction and control the overall risk of the market. The "swap" adopts the transaction model of the quotation agency to give play to the role of the quotation agency to stabilize the market. With reference to the Shanghai -Shenzhen -Hong Kong -Hong Kong link mechanism, the initial implementation of total management, while meeting the needs of investor risk management while preventing market risks. The second is to strengthen the risk management arrangements between the financial market infrastructure of the two places. Considering the actual situations of international financial derivatives, liquidation settlement, and risk management, we will combine electronic transactions with the central opponent's square settlement to formulate a stable and reasonable system connection arrangement to ensure that the "swap" business strictly abides by strictly abide by the business In the principle of macro prudence, risk control measures are adopted in multiple levels, focusing on preventing cross -market risks overflow, and weaving a protective network.

The third is to deepen regulatory cooperation.The People's Bank of China will maintain close communication with the Hong Kong Securities Regulatory Commission, the Hong Kong HKMA and other departments, sign a memorandum of regulatory cooperation, and work closely in information sharing and emergency disposal.Recommended reading

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