HKMA, PBoC boost Hong Kong's fixed income and RMB markets

The Hong Kong Monetary Authority (HKMA), the People's Bank of China (PBoC), and the Securities and Futures Commission (SFC) announced a series of measures to deepen financial cooperation between Hong Kong and the Chinese Mainland.

These initiatives include supporting the development of a Hong Kong Fixed Income and Currency (FIC) electronic trading platform.

Significant enhancements are planned for Southbound Bond Connect, such as increasing the annual investment quota, developing bond repurchase (repo) business, and expanding the product scope to include HKD and RMB bonds.

The measures also aim to connect to the Macao bond market.

For Northbound Bond Connect, onshore bonds from the Ministry of Finance and Mainland policy banks will become eligible margin collateral, and operational efficiency will improve with extended settlement times.

Swap Connect will be enhanced by including the interbank 7-Day Fixing Depository-Institutions Repo Rate (FDR007) as a reference rate.

The launch of HKEX 5-Year China Government Bond Futures on 3 August is also supported.

The HKMA also announced five measures to bolster Hong Kong's role as a leading offshore RMB business hub.

The HKMA's RMB Business Facility will increase from RMB200 billion to RMB500 billion, effective 10 July 2026, with extended tenors including 9-month, 2-year, and 3-year options.

The Authority will explore introducing a tendering mechanism for 7-day offshore RMB liquidity and investigate issuing offshore RMB short-term debt instruments to support building a robust offshore RMB yield curve.

Additionally, the HKMA aims to promote a bilateral currency transaction framework between Indonesian Rupiah and offshore RMB and issue good practices to banks to encourage broader RMB adoption.

HKMA Chief Executive Eddie Yue highlighted these initiatives as crucial for reinforcing Hong Kong's international financial centre status.