The People's Bank of China announced today (May 5th) that preparations for the interconnection and cooperation of the interest rate swap market between Hong Kong and mainland China (known as the "Swap Connect") are progressing smoothly, with the initial opening of the "North Swap Connect". Transactions under the "North Swap Connect" will be launched on May 15th, 2023. The "Northbound Swap Connect" is a mechanism arrangement for overseas investors from Hong Kong and other countries and regions to participate in the mainland interbank financial derivatives market through the interconnection of trading, clearing, settlement, and other aspects between Hong Kong and mainland infrastructure institutions. The initial tradable variety is interest rate swap products, and the quotation, trading, and settlement currency is RMB. The domestic investors participating in the "northward swap link" shall sign a quotation agreement with the foreign exchange trading center and be the clearing members of the interest rate swap centralized clearing business of the clearing house or the clearing clients of such members. The overseas investors participating in the "Northbound Swap Connect" are foreign institutional investors who meet the requirements of the People's Bank of China and have completed the registration of mainland interbank bond market access, and have opened the "Northbound Swap Connect" trading authority through the Foreign Exchange Trading Center. Overseas investors who plan to apply for the trading authority of the "Northbound Swap Connect" must also apply to become clearing members of the over-the-counter settlement company or clearing clients of such members. At the initial stage, the daily net trading limit for the entire market was RMB 20 billion, and the clearing limit was RMB 4 billion. The limit can be adjusted in a timely manner according to market conditions in the future. (New News Agency)
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