Governance Regulation, Lastest Topics, Popular News, Regulatory Updates
Arrangement for Offshore RMB Bond Repurchase Business Using Bonds Held under Northbound Bond Connect as Collateral announced by HKMA
14
Jan
Jan
The Hong Kong Monetary Authority (HKMA) announced on January 13 the arrangement for offshore RMB bond repurchase (repo) business to enhance market-based offshore RMB liquidity management and bolster Hong Kong’s status as an offshore RMB hub. Under this initiative, Northbound Bond Connect participants can use eligible onshore bonds as collateral to conduct RMB repo transactions in Hong Kong. Scheduled to launch soon, the arrangement includes participation by Northbound Bond Connect investors, with eligible bonds encompassing all types held under the program. Initially, 11 Primary Liquidity Providers designated by the HKMA will act as market makers, with transactions conducted bilaterally, via electronic platforms, or through existing Northbound Bond Connect mechanisms. Settlement will occur under the Central Moneymarkets Unit (CMU) Repo Service, with bond ownership temporarily transferred to the repo buyer during the repo period, though re-use of bonds is restricted. Data reporting requirements for market makers include transaction details for same-day submission to the HKMA. Operational details for settlement will be provided later, and the HKMA will monitor market operations, making adjustments as needed to support sustainable offshore RMB business development. Resources: https://www.hkma.gov.hk/eng/news-and-media/press-releases/2025/01/20250113-3/
