To implement the strategic arrangements of the CPC Central Committee and the State Council on steadily advancing the opening-up of China's financial markets, the Mainland and Hong Kong interest rate swap markets mutual access scheme (hereinafter referred to as "Swap Connect") was officially launched on May 15, 2023. Since the launch of Swap Connect, transaction volume under the scheme has been growing steadily. In May 2024, Swap Connect was further optimized, with the introduction of Interest Rate Swap (IRS) contracts using the International Monetary Market (IMM) settlement dates for their payment cycles, backdated IRS contracts, and contract compression services. These enhancements are designed to provide more flexibility for offshore institutional investors to manage interest rate risk, and strengthen the appeal of RMB assets to offshore investors. As of the end of April 2025, 20 Mainland dealers and 79 offshore investors had participated in Swap Connect, completing more than 12,000 interest rate swap transactions with an aggregate notional amount of approximately RMB 6.5 trillion.
To further promote the collaborative development of financial derivatives markets on the Mainland and in Hong Kong, as well as the high-level opening-up of financial markets, after assessing the operational experience of Swap Connect and feedback from Mainland and offshore investors, the People’s Bank of China, the Hong Kong Securities and Futures Commission and the Hong Kong Monetary Authority plan to further enrich the product types under Swap Connect. First, the tenor of IRS contracts would be extended to 30 years to meet the diverse risk management needs of market institutions. Second, the product scope would be expanded by including IRS contracts using the Loan Prime Rate (LPR) as the reference rate. Relevant financial infrastructure operators in both markets will roll out these enhancement measures progressively.
Looking ahead, regulatory authorities on the Mainland and in Hong Kong will continue to provide guidance to the financial market infrastructure operators in both markets to continue to enhance relevant arrangements, taking into account the operational experience of Swap Connect, with a view to steadily advancing the further opening-up of China’s financial markets, promoting RMB internationalization in a steady, orderly and sound manner, and supporting the successful development of Hong Kong as an international financial centre.
