Xunqing Settlement and London Clearing House sign a memorandum of cooperation to promote the acceptance of offshore RMB treasury bonds as eligible collateral

Zhitong Finance App learned that the market infrastructure operator Xunqing Clearing Limited (Xunqing Clearing), wholly owned by the Hong Kong Exchange Fund, and London Clearing House Limited (London Clearing House), a subsidiary of the London Stock Exchange Group, signed a memorandum of cooperation in Hong Kong today (June 9) to jointly support the use of Hong Kong payment system infrastructure to develop derivatives settlement and settlement solutions denominated in offshore RMB and other applicable currencies. According to the Memorandum of Cooperation, the two sides also promised to cooperate to promote the acceptance of offshore RMB treasury bonds hosted on the Hong Kong Central Securities Custody Platform infrastructure as eligible collateral for London Clearing House members. This partnership will help international investors manage their offshore RMB bond holdings more efficiently, improve liquidity and capital efficiency, and enhance risk management capabilities.

This Memorandum of Cooperation marks an important step in the process of making Chinese bonds widely accepted eligible collateral in the international market. This development is based on Expedited Clearing and a series of initiatives previously implemented by the Hong Kong Monetary Authority. In February 2024, the HKMA included onshore treasury bonds and policy financial bonds in the scope of eligible collateral in its RMB liquidity arrangement. Since January 2025, these bonds held by international investors have been approved as performance collateral for “swap” transactions settled with Hong Kong OTC Clearing Limited (OTC Clearing Company). In March 2025, the scope of application of these bonds as performance collateral was further extended to include all other derivatives transactions of OTC clearing companies. In February 2025, Xunqing Settlement launched a tripartite repurchase transaction for mainland Chinese bonds held by overseas investors through Bond Connect in Hong Kong.

Chen Daqiang, CEO of Xunqing Clearing, said, “The cooperation between Xunqing Clearing and the London Clearing House fully reflects the strong demand from international investors for offshore RMB bonds and related risk management tools. This also highlights the unrivaled role of Hong Kong's payment and settlement infrastructure in supporting global investors to allocate offshore RMB bonds. We are pleased that RMB treasury bonds held by the Hong Kong Central Securities Custody Platform Infrastructure will be accepted as eligible collateral outside Hong Kong for the first time. Xunqing Settlement will continue to cooperate with other market infrastructures, regulators and market participants to expand our service coverage and further strengthen Hong Kong's position as an international financial center for renminbi-related businesses.”

Susi de Verdelon, CEO of the London Clearing House, said: “We are delighted to work with Expedited Clearing and our clearing member banks and customers as we have ambitious plans to expand our services to global market participants interested in trading and settling deliverable offshore RMB derivatives. The Asia Pacific region remains a strategic focus for London Clearing House, and we look forward to continuing our partnership so that more financial institutions can benefit from the improvements in margin, capital and operational efficiency brought about by our services.”

The service is expected to launch in the first half of 2026, depending on regulatory approval.