Mainland-Hong Kong Bond Market Connect to be Established
Mainland-Hong Kong Bond Market Connect to be Established
On May 16, 2017, the People’s Bank of China and the Hong Kong Monetary Authority made a joint announcement approving the China Foreign Exchange Trade System & National Interbank Funding Centre, China Central Depository & Clearing Co., Ltd, Shanghai Clearing House, together with Hong Kong Exchanges and Clearing Limited and Central Moneymarkets Unit to collaborate in establishing mutual bond market access between Hong Kong and Mainland China. Among the 5 things announced, details which will be discussed below, the main issue is the fact that regulators of the Hong Kong and Mainland bond markets will enter into a memorandum of understanding on supervisory cooperation to establish effective supervisory cooperation arrangements and liaison mechanisms in order to maintain financial market stability and fair trading. This joint announcement mainly focuses on announcing that northbound trading which will abide with the current policy framework for overseas participation in the China Interbank Bond Market and respect international norms and practices will commence first in the initial phase with no investment quota, followed by southbound trading. Read more…