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Optimization measures for Swap Connect promotes RMB internationalization: expert

China

China

China

Optimization measures for Swap Connect promotes RMB internationalization: expert

2024-05-14 17:16 Last Updated At:20:07

The newly announced measures to optimize the mutual access between the mainland and Hong Kong interest rate swap markets, also known as Swap Connect, will further unleash the potential of overseas investors in investing in mainland capital market and promote the internationalization of the renminbi, expert said.

China's central bank, the Hong Kong Securities and Futures Commission, and the Hong Kong Monetary Authority announced a series of measures on Monday to optimize the Swap Connect, aiming to better meet the diversified risk management needs of domestic and foreign investors and reduce participation costs.

These measures, including the addition of standardized interest rate swap contracts with the International Monetary Market (IMM) settlement dates as payment periods, the introduction of contract compression services, the optimization of related system functions, and an extension of the fee discount period.

Lu Xiangqian, general manager of the Second Department of Marketing of the China Foreign Exchange Trade System, highlighted the positive impact and potential benefits of the optimization measures.

"The launch of these optimization measures for Swap Connect signifies another milestone in the construction of the mutual access mechanism between the Hong Kong and mainland markets. It will provide international investors with more accurate and efficient tools for Renminbi interest rate risk hedging and duration management, further enhancing the competitiveness of Swap Connect in the international derivatives market," said Lu.

Launched on May 15, 2023, the Swap Connect is a mechanism designed for overseas investors who purchase various Renminbi assets, including bonds, through channels such as Bond Connect to manage interest rate risks.

The Swap Connect resolves the inconveniences and high costs that overseas investors previously faced when managing Renminbi interest rate risks. It helps attract more international investors to participate in the Chinese bond market and further strengthens their confidence in holding Renminbi assets, including bonds.

"The Swap Connect will synergize with mechanisms such as Bond Connect to further unleash the potential of overseas investors in investing in the mainland capital market. This will contribute to deepening and broadening the opening of the country's financial market and promoting the internationalization of the Renminbi," said Lu.

Optimization measures for Swap Connect promotes RMB internationalization: expert

Optimization measures for Swap Connect promotes RMB internationalization: expert

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China opposes U.S. sanctions against Chinese firms over alleged Russian involvement

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China opposes U.S. sanctions against Chinese firms over alleged Russian involvement

China opposes U.S. sanctions against Chinese firms over alleged Russian involvement

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