Northbound trading of Swap Connect launched between Hong Kong, mainland

Northbound trading of Swap Connect, a derivatives mutual market access program, was officially launched on Monday, marking another new milestone in the financial cooperation between Hong Kong and the mainland.

Northbound trading of Swap Connect provides a convenient and secure channel for international investors to trade interest rate swap products in the mainland via a connection between infrastructure institutions in Hong Kong and the mainland. The scheme aims to facilitate global investors' management of interest rate risks arising from their allocation to mainland bonds.

Eddie Yue, chief executive of the Hong Kong Monetary Authority, said the program will create favorable conditions for global investors to increase their participation in the onshore bond market and carries special significance for enhancing the recognition of and confidence in renminbi bonds in the international market.

Northbound trading of Swap Connect will also provide new opportunities for Hong Kong's financial institutions and strengthen Hong Kong's role as a global risk management center and offshore renminbi hub, he said.

Nicolas Aguzin, CEO of the Hong Kong Exchanges and Clearing Limited (HKEX), said the Swap Connect adds to the ecosystem of renminbi assets that the Connect program offers international investors, and it supports the use of offshore renminbi to invest in the onshore interest rate swap market, all of which provides choice for investors.

The Swap Connect supports the broader sustainable renminbi internationalization process, a very important process that enhances the role of the currency in global markets, Aguzin said in his speech at a launch ceremony.