China to enhance Swap Connect by extending tenor, use loan prime rate as reference
Mainland China and Hong Kong are expanding the product offerings under the Swap Connect scheme, increasing the tools to manage interest-rate risks, as regulators look to further open up the capital market to global investors.
The tenor of interest-rate swap contracts would be extended to 30 years from 10 years 'to meet the diverse risk management needs of market institutions', the Securities and Futures Commission (SFC) said in a statement on Thursday. Contracts using the onshore Loan Prime Rate as the reference rate would also be introduced, it added.
'Relevant infrastructure operators in both markets will implement these enhancement measures progressively,' the SFC said, following its joint effort with the People's Bank of China and the Hong Kong Monetary Authority.
Swap Connect, launched in
May 2023, is the world's first derivatives mutual market access programme, with its initial phase designed to help global investors manage interest-rate risks when they invest in yuan-denominated bonds. The scheme was updated last year to enable institutions to trim capital costs and foster active trading.
08:23
China unveils policy package to guard against US tariffs ahead of trade talks in Switzerland
China unveils policy package to guard against US tariffs ahead of trade talks in Switzerland
Swap Connect allows domestic and foreign investors to conveniently complete interest-rate swap transactions, according to regulators. It centralises clearing through mutual access in terms of trading, clearing and settlement, without changing trading habits and in compliance with the laws and regulations of both markets.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
South China Morning Post
2 hours ago
- South China Morning Post
How a ‘Harvard International' could boost Hong Kong as an education hub
Chief Executive John Lee Ka-chiu has invited international students worried about finishing their courses at Harvard University in the US to continue their studies at one of Hong Kong's universities. Other universities in Malaysia and Japan have put forward similar suggestions. This comes as Hong Kong is considering how to make best use of the part of the Northern Metropolis reserved for universities to bolster its role as an education hub . That site is at the heart of our future technology research and development area, and within shouting distance of Shenzhen, China's engineering and manufacturing powerhouse. Lee's invitation is a bold step in the right direction, but I suggest we take the opportunity to go even further and advance the city's higher education profile. Hong Kong should reach out to Harvard and offer to make a site available for an additional campus in the city. The new facility could be called Harvard International and admit all the university's international students and a significant number of American students at any one time, perhaps on a revolving basis. The trigger for these suggestions is the Trump administration's extraordinary attack on the American institution, widely regarded as one of the best in the world. The university has had its research grants cancelled and was told its tax status would be reconsidered while its ability to admit international students remains uncertain. We don't need to consider the merits of these assaults, and we should note that many are still subject to legal challenges in the US. But the uncertainty they have created gives Hong Kong an opening.
South China Morning Post
2 hours ago
- South China Morning Post
Hong Kong puts construction of 8,300 homes on hold in Fanling
Hong Kong's housing authorities have suspended a key public residential development in a northern town consisting of 8,300 homes due to the suspected high costs of building the flats on deep rock strata, according to a lawmaker. The suspension of the development, including its site formation and infrastructure works, in Fanling came to light on Sunday in a document the Housing Department and the Civil Engineering and Development Department submitted to the North District Council, a day before a meeting to discuss the matter on Monday. The Fanling Area 17 site, spanning about 5.47 hectares (13.5 acres) of both government and private land, is located to the east of Ling Shan Road and Jockey Club Road, south of Ma Sik Road and west of Fan Leng Lau Road. It currently houses the Fan Garden Police Driving and Traffic Training Centre. The document did not mention the exact reasons of the suspension but said: 'To align with the government's principle of maintaining sustainable public finances, the Housing Bureau has adjusted the development plan for the Fanling Area 17 public housing project after reviewing the cost-effectiveness of public housing initiatives over the next ten years.' Authorities said they had 'more flexibility to prioritise sites that are more suitable and cost-effective for construction' with sufficient land supply for public housing in the next decade. Lawmaker Edward Lau Kwok-fan, who is a member of the Legislative Council's housing panel, said the government's decision stemmed from geotechnical studies revealing unusually deep rock strata beneath the site, leading to significantly higher foundation costs.
South China Morning Post
3 hours ago
- South China Morning Post
New stablecoin law to enhance Hong Kong's financial appeal to global issuers
The expected increase in market demand for stablecoins will encourage licensed institutions overseas to issue such cryptocurrencies in Hong Kong, boosting competitiveness, according to the city's financial chief as it prepares for its regulatory regime to take effect in August. In his weekly blog on Sunday, Financial Secretary Paul Chan Mo-po said that the city market value of stablecoins globally was estimated at around US$240 billion (US$30.6 billion), with trading volume exceeding US$20 trillion last year. 'With the booming digital asset market, the market demand for stablecoins is expected to increase further,' Chan said. 'We have noticed that many market players are very interested in this.' He said after the law comes into effect, the Hong Kong Monetary Authority would process the license applications received as soon as possible to enable qualified applicants to conduct their business, 'bringing new opportunities to Hong Kong's real economy and financial services'. Hong Kong is among the first jurisdictions globally to introduce detailed regulations for the issuance of stablecoins, which are cryptocurrencies typically pegged to a reference asset, such as a fiat currency like the US dollar. The relevant ordinance is scheduled to take effect on August 1. The new regulatory framework provides Hong Kong with one of the most comprehensive legal frameworks for stablecoins and comes amid a worldwide push to regulate digital assets, which some fear could destabilise financial systems due to the ease with which they enable money to cross borders. Coupled with the city's significant offshore yuan holdings and mainland China's restrictions on cryptocurrency use, the new law has raised hopes that the city could secure a prominent position in the stablecoin market, which is currently dominated by US dollar-backed tokens, such as Tether's USDT and Circle's USDC.
