Enhancement Arrangements for Offshore RMB Bond Repurchase Business announced by HKMA
The following is issued on behalf of the Hong Kong Monetary Authority:
The Hong Kong Monetary Authority (HKMA) announced today (July 8) enhancements to the offshore RMB bond repurchase (repo) business (Note 1), to facilitate the participation of Northbound Bond Connect investors in repo business. In particular, the enhancements include:
1. Supporting the rehypothecation of bond collaterals during the repo period (Note 2):
The offshore RMB repo business has been well received by the market since its official launch on February 10, 2025. In this initial phase, the bond collaterals acquired by participating institutions are locked and managed by the Central Moneymarkets Unit (CMU) platform and cannot be re-used during the repo period. In consultation with relevant Mainland authorities and taking into account industry feedback, we will allow rehypothecation of bond collateral during the repo period, bringing this into alignment with international market practice. The enhancement will facilitate more efficient use of collaterals, reduce the financing costs for market participants, and enhance the efficiency of liquidity management.
In particular, bond collaterals can be re-used during the repo period in four specific use cases: a) for re-use in offshore repo transactions; b) as collateral for the HKMA's RMB Liquidity Facility; c) as margin collateral at OTC Clearing Hong Kong Limited (OTCC); and d) for cash bond trading through Northbound Bond Connect. Participating institutions shall follow relevant policies and operational rules for the respective use cases when re-using the collateral (for instance, if the collateral is re-used in a new offshore repo transaction during the repo period, the participating institution should follow the latest arrangements of offshore RMB repo business as set out further below).
2. Supporting cross-currency repo (including HKD, USD and EUR):
At present, offshore RMB repo can only be settled in RMB. With the enhancement, settlement in other currencies (including HKD, USD and EUR) will be supported, with a view to facilitating participating institutions' multi-currency funding activities by collateralising onshore RMB bond holdings, enriching their liquidity management tools, and hence increasing the attractiveness of onshore bonds.
These two enhancement measures aim to adopt international market best practices and enhance operational efficiency. They will further expand the depth and breadth of the offshore repo market, improve the market-based mechanism for offshore RMB liquidity management, and broaden the use of onshore RMB bonds as collateral in the offshore market.
The above arrangements will be officially launched on August 25, 2025.
Latest Arrangements of Offshore RMB Repo Business
To facilitate the smooth implementation of the enhancement measures, the latest arrangements for offshore RMB repo transactions (including repo transactions conducted using bond collateral acquired through a repo transaction) are set out as follows:
1. Participating Institutions:
All existing Northbound Bond Connect investors, including CMU members and offshore investors with CMU sub-accounts opened through Hong Kong custodian banks that are CMU members.
2. Eligible Bonds:
Bonds held by participating institutions under Northbound Bond Connect, and bond collaterals acquired through offshore repo transactions, regardless of bond type.
3. Market Maker Arrangement:
The 11 Primary Liquidity Providers designated by the HKMA (Note 3) will serve as market makers. Each repo transaction must involve at least one of these market makers as a counterparty.
4. Transaction and Settlement Arrangements:
(a)Master Agreement: Participants may choose their own repo agreement template (e.g., Global Master Repurchase Agreement (GMRA) or National Association of Financial Market Institutional Investors (NAFMII)'s Bond Repurchase Master Agreement, etc.).
(b)Trading Arrangement: Transactions may be conducted:
bilaterally over-the-counter;
in the same manner as existing Northbound Bond Connect transactions, and via the linkage between the infrastructures in the onshore and offshore markets;
through offshore electronic trading platforms; or
through onshore electronic trading platform.
(c)Settlement Arrangement: Settlement will be completed under the Repo Service by CMU. Settlement currencies include RMB, HKD, USD and EUR.
5.Data Reporting:
Market makers are required to report repo transaction data (Note 4) to the HKMA on the same day of the transaction for market monitoring purpose. The HKMA will further communicate with the market makers to finalise the reporting requirements and submission channels.
The operational details for bond transfer and settlement will be announced by CMU separately. The HKMA will continue to closely monitor market conditions to ensure orderly market operations. The HKMA will also maintain communication with the industry and review and adjust the arrangements as appropriate to support the robust and sustainable development of offshore RMB business.
Note 1: The HKMA announced the launch of offshore RMB bond repo business on January 13, 2025 (please refer to the HKMA press release). This measure was implemented on February 10, 2025.
Note 2: Operational details will be announced by CMU later. Currently, the rehypothecation of bond collateral is only applicable to repo transactions settled in the Delivery versus Payment model. The timeline for CMU's tri-party repo service to support the rehypothecation of bond collateral will be notified separately in due course.
Note 3: Including 1) Agricultural Bank of China Limited, 2) Bank of China (Hong Kong) Limited, 3) Bank of Communications Co., Ltd., 4) BNP Paribas, 5) China CITIC Bank International Limited, 6) China Construction Bank (Asia) Corporation Limited, 7) Citibank, N.A., 8) Hang Seng Bank Limited, 9) The Hongkong and Shanghai Banking Corporation Limited, 10) Industrial and Commercial Bank of China (Asia) Limited and 11) Standard Chartered Bank (Hong Kong) Limited.
Note 4: The specific information to be reported includes: names of the trading institutions (including both the repo party and the reverse repo party), total amount of funds borrowed by the repo party, bond name, bond code, repo term, total face value, repo rate, transaction/first settlement date, settlement amount, trading platform/means, default-related information etc.
CFS to follow up certain batches of powdered infant and young children formula with possible presence of Cereulide produced by Bacillus cereus
The Centre for Food Safety (CFS) of the Food and Environmental Hygiene Department (FEHD) today (January 10) said that, it took initiative to meet with Nestlé Hong Kong again today, and confirmed the company's today announcement of an additional batch of powdered infant and young children formula suspected to have possibly used the raw material concerned. Nestlé Hong Kong has voluntarily stopped sales, removed from shelves the affected products and has initiated a precautionary recall. The CFS has collected samples of powdered infant and young children formula from the market for Bacillus cereus testing, the test results so far were satisfactory. The Environmental and Ecology Bureau is also closely monitoring the supply situation of other formula milk powder and maintaining communication with other major suppliers. It is noted that there is sufficient formula milk powder to meet the demand.
The spokesman said, the CFS has been actively following up on Nestlé company's voluntary and precautionary recalls of certain batches of its powdered infant and young children formula in certain areas in Europe due to possible presence of Cereulide produced by Bacillus cereus in the individual raw material. According to the latest information from Nestlé Hong Kong today, an additional batch of its powdered infant and young children formula imported into Hong Kong might have used the raw material concerned. The CFS had earlier enhanced surveillance in the market and collected a sample from the above batch for testing of Bacillus cereus. The test result of the sample was satisfactory. Nevertheless, as a precautionary measure, Nestlé Hong Kong has voluntarily stopped sales, removed from shelves the affected products and has initiated a precautionary recall.
Product details are as follows:
Product name (Net weight): NAN PRO 1 2 HMO (800g)
Batch number: 51670742F2
Best-before date: June 16, 2027
Place of Origin: Germany
"The CFS met Nestlé Hong Kong again today, urging them to properly handle the product recall issue and respond to public enquiries, in order to safeguard consumers' legitimate rights and interests. In addition, the CFS and Nestlé Hong Kong have jointly followed up, six suspected affected batches of infant and young children formula products that had not entered the market were marked and sealed. An additional 15 batches are currently en route to Hong Kong and will also be marked and sealed upon arrival. The CFS will continue to closely monitor the recall matters and remain fully committed to ensuring food safety, " the spokesman said.
Nestlé Hong Kong has initiated a recall of the affected batches of the products concerned. For enquiries about the recall, members of the public may contact the company through the following channels:
Consumer services hotline: 2599 8874 / 2797 6031/ 2179 8136 (Monday to Sunday, 9am to 9pm)
Email: consumerservices@hk.nestle.com
WhatsApp: 5283 4139 (NESTLÉ® NAN®) / 2599 8871 (Wyeth® Nutrition)
Online form: forms.office.com/e/BhqMhWfsUG?origin=lprLink
Consumers may choose to bring along the products (brand new or opened) for refund at place of purchase, or at exclusive service counters of Nestlé Nutrition Services from January 13 (Tuesday) onwards, to settle the recall and refund of the batches of the products concerned. Details of the exclusive service counters are as follows:
Kowloon Services Counter
Address: G/F, Park Hovan Commercial Building, 18 Hillwood Road, Tsim Sha Tsui, Kowloon (MTR Jordon Station Exit D)
Contact number: 3996 8196
Office hour: Monday to Saturday, 11am to 7.30pm; Sunday, 1pm to 5.30pm (except public holidays)
Hong Kong Services Counter
Address: 1/F, Ka Nin Wah Commercial Building, 423-425 Hennessy Road, Hong Kong (MTR Causeway Bay Station Exit B)
Contact number: 3996 8197
Office hour: Monday to Saturday, 11am to 7.30pm (except Sundays and public holidays)
The CFS, through its Food Incident Surveillance System, noted earlier that certain batches of Nestlé powdered infant formula were being voluntarily recalled in Europe due to possible contamination with Bacillus cereus. Upon learning of the incident, the CFS has immediately initiated follow up actions, published food incident posts to inform the public and the trade about the issue, and has been actively following up on the incident and enhanced surveillance.
Over the past three days (as of 4pm on January 9), the FEHD received a total of 18 food complaints and enquiries suspected to be related to the infant and young children formula products, including one anonymous complaint without contact information. The CFS and the Environmental Hygiene Branch have promptly followed up on all cases, including contacting the parties concerned to obtain details and collecting samples for testing. In addition, the CFS has referred the cases to the health department for follow-up. At present, no food poisoning cases related to the formula have been recorded.
Bacillus cereus is commonly found in the environment. Unhygienic conditions in food processing and storage may give rise to its growth. Cereulide is a heat-stable toxin produced in food by some strains of Bacillus cereus. Consuming food contaminated with excessive Bacillus cereus or its heat-stable toxins may cause gastrointestinal upset such as vomiting and diarrhoea.
The spokesman urged members of the public not to let infants and young children consume the affected batches of the products, and to seek medical treatment for infants or young children who felt unwell after taking the products concerned. The trade should also stop using or selling the affected batches of the products immediately.
"The CFS continues to closely monitor the developments of the situation, follow up and take appropriate action," the spokesman said.
Source: AI-found images
