Expedited Clearing welcomes Hong Kong Stock Exchange's clearing houses to accept eligible treasury bonds, etc. as non-cash collateral

The Zhitong Finance App learned that Xunqing Settlement today welcomed a wholly-owned subsidiary of the Hong Kong Stock Exchange (00388), Hong Kong Futures Clearing Company, an on-market derivatives clearing house, and the Hong Kong Stock Exchange Options Clearing House to officially accept additional eligible non-cash collateral. Additional collateral includes Chinese treasury bonds and policy financial bonds held through Bond Connect's “Northbound Connect” (collectively, “Eligible Bonds”), and offshore bonds issued by the Ministry of Finance of the People's Republic of China (Ministry of Finance bonds).

This arrangement marks an important breakthrough in the scope of application of renminbi-denominated assets as collateral. On the first day of the launch, the market actively participated. Eligible Bond Connect bonds totaling over RMB 400 million and Ministry of Finance bonds held by the Central Debt Settlement System (CMU) were successfully accepted as collateral by the Hong Kong Futures Clearing Corporation and the Hong Kong Stock Exchange Options Clearing Office.

Expanding acceptance of eligible Bond Connect bonds and Ministry of Finance bonds not only provides market participants with greater collateral flexibility, but also enables more efficient use of capital. By improving the availability and liquidity of renminbi-denominated assets, this arrangement will help deepen the connectivity between onshore and offshore financial markets, promote the internationalization of the RMB, and consolidate Hong Kong's leading position as a fixed income and currency hub.

Chen Daqiang, Group Chief Executive Officer of Xunqing Clearing Holdings Limited and CEO of Xunqing Clearing said, “We are pleased to work with the Hong Kong Stock Exchange to successfully implement the bond market optimization measures jointly issued by the People's Bank of China, the Hong Kong Monetary Authority and the Hong Kong Securities and Futures Supervisory Commission in July this year. With CMU's unique advantages as a one-stop gateway for onshore and offshore RMB assets, we are committed to promoting the wider application of RMB assets as collateral to strengthen Hong Kong's position as a global offshore RMB business center.”

CMU, operated by Xunqing Clearing, is the core market infrastructure of the Bond Connect program. Since 2010, CMU has supported the Treasury in issuing offshore bonds.