On May 15, 2023, mutual access between the Mainland and Hong Kong interest rate swap markets (Swap Connect) was officially launched. On the morning of May 15, 2023, the People’s Bank of China (PBOC), Securities and Futures Commission (SFC) and Hong Kong Monetary Authority (HKMA) jointly held the ceremony to launch the Swap Connect. John KC Lee, Chief Executive of the Hong Kong Special Administrative Region, Pang Gongsheng, Deputy Governor of the PBOC and Administrator of State Administration of Foreign Exchange (SAFE), Wang Linggui, Deputy Director of Hong Kong and Macao Affairs Office of the State Council, LEUNG Fung Yee, Chief Executive of SFC and Eddie Yue, Chief Executive of HKMA attended and addressed the ceremony. Yin Zonghua, Deputy Director of Liaison Office of the Central People's Government in the Hong Kong SAR, Paul Chan, the Financial Secretary of Hong Kong SAR, Christopher Tui, Secretary for Financial Services and the Treasury, and representatives from ministries and commissions under the State Council, financial market infrastructure institutions and market institutions also attended the ceremony.
Swap Connect allows domestic and foreign investors to conveniently complete RMB interest rate swap transactions and centralized clearing through mutual access between the Mainland and Hong Kong financial market infrastructure institutions in terms of trading, clearing, and settlement, without changing trading habits and in compliance with the laws and regulations of both markets. At the same time, the PBOC will strengthen regulatory cooperation with the SFC and the HKMA and establish liaison and negotiation mechanisms so as to ensure the smooth and orderly operation of Swap Connect, and maintain the stability of the financial market.
Swap Connect is another important measure taken by the central government to support the development of Hong Kong and promote cooperation between the Mainland and Hong Kong. The launch of Swap Connect is conducive to consolidating and enhancing Hong Kong's position as an international financial center, providing more convenient channels for overseas investors to manage interest rate risks, and steadily advancing China's financial opening up.
Next, the PBOC will collaborate with the SFC, the HKMA, and financial market infrastructure institutions in both Mainland and Hong Kong to further improve relevant institutional arrangements based on the operation of Swap Connect, support the prosperity and development of Hong Kong as an international financial center, and promote the high-quality development and high-level opening up of the Chinese financial market.
