Hong Kong Exchanges and Clearing Limited (HKEX) has announced that its subsidiary, OTC Clearing Hong Kong Limited (OTC Clear), will begin accepting Chinese Government Bonds and Policy Bank Bonds as collateral for all derivative transactions from 21 March 2025.
OTC Clear to Accept China Bonds as Collateral for All Derivatives
The firm said in a press release that the move expands on an existing framework introduced in January, which allowed these bonds to be used for initial margin requirements under Northbound Swap Connect transactions.
The change means international investors holding these bonds through Bond Connect will have increased flexibility in managing their collateral across a broader range of derivatives.
Glenda So, HKEX Head of Platform & Market Structure Development, commented:
“We are delighted to be supporting the expanded use of onshore RMB bonds as collateral in the offshore market.
“This initiative will provide greater flexibility to international investors and improve their capital efficiency, further enhancing the attractiveness of RMB-denominated assets and promoting the internationalisation of the RMB.”
OTC Clear specialises in clearing a range of derivatives, including interest rate swaps, non-deliverable currency forwards, cross-currency swaps, and deliverable FX.
The new collateral framework is expected to enhance market efficiency and reinforce Hong Kong’s role as a global hub for RMB trading and risk management.
