The Hong Kong Securities and Futures Commission (SFC) noted that OTC Clearing Hong Kong Limited (OTC Clear) has started accepting onshore RMB bonds issued by the Ministry of Finance and mainland policy banks that are held under Northbound Bond Connect by offshore investors as margin collateral for Northbound Swap Connect transactions. Building on this, the SFC, the People’s Bank of China (PBoC) and the Hong Kong Monetary Authority (HKMA) reached a consensus to allow offshore investors to use these bonds as margin collateral for all other eligible derivative transactions cleared at OTC Clear. The SFC framed the change as enabling global institutional investors to use onshore RMB bonds as non-cash collateral more efficiently when clearing through OTC Clear, with the stated aim of reducing liquidity costs and supporting Hong Kong’s role as an offshore RMB hub and the development of its fixed income market. Details of the expanded arrangement are subject to regulatory review and will be announced in due course.
Hong Kong Securities & Futures Commission 2025-01-13
Hong Kong Securities and Futures Commission agrees with the People’s Bank of China and Hong Kong Monetary Authority to expand use of onshore RMB bonds as margin collateral at OTC Clear
The Hong Kong Securities and Futures Commission, in collaboration with the People’s Bank of China and the Hong Kong Monetary Authority, will allow offshore investors to use onshore RMB bonds as margin collateral for eligible derivative transactions cleared at OTC Clearing Hong Kong Limited. This initiative aims to enhance RMB bonds' efficiency as non-cash collateral, reduce liquidity costs, and bolster Hong Kong's position as an offshore RMB hub. Further details are pending regulatory review.