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Exchange Fund

Exchange Fund Bills & Notes

Exchange Fund Bills and Notes Issuance Programme

Exchange Fund Bills and Notes are Hong Kong dollar debt securities issued by the HKMA. They constitute direct, unsecured, unconditional and general obligations of the Hong Kong Special Administrative Region Government for the account of the Exchange Fund and have the same status as all other unsecured debt of the Government. The Bills and Notes are for the account of and payable from the Exchange Fund.

The Exchange Fund Bills and Notes Issuance Programme ensures the supply of a significant amount of high-quality Hong Kong dollar debt paper, which can be employed as trading, investment and hedging instruments. Authorized Institutions that maintain Hong Kong dollar clearing accounts with the HKMA may use their holdings of Exchange Fund papers to borrow Hong Kong dollars overnight from the Discount Window. Active primary and secondary markets for Exchange Fund Bills and Notes has facilitated the development of a sophisticated Hong Kong dollar debt market.

Retail investors may obtain the indicative bid and offer prices of Exchange Fund papers quoted by major banks in Hong Kong at the CMU Bond Price Bulletin website developed by the HKMA's Central Moneymarkets Unit ( ).


Exchange Fund Bills

The Exchange Fund Bills Programme was introduced in March 1990. Under the programme, bills of 91-, 182- and 364-day maturity are regularly auctioned by public tender.

For more details, please refer to the Information Memorandum of Exchange Fund Bills Programme (PDF File, 73KB).

Outstanding amount of Exchange Fund Notes

Exchange Fund Notes

The issuance of Exchange Fund Notes and Government Bonds has been streamlined to minimise overlap in longer tenors.  Starting from January 2015, the HKMA has stopped new issuance of Exchange Fund Notes of tenors of three years or above, while two-year Exchange Fund Note issuance continues.  At the same time, new issuance of two year Government Bonds has ceased and new issuance of Government Bonds will be for tenors of three years and above.

For more details, please refer to the Information Memorandum of Exchange Fund Notes Programme (PDF File, 100KB).

Outstanding amount of Exchange Fund Notes

Recognised Dealers, Market Makers and Eligible Market Makers

In Hong Kong, the Exchange Fund Bills and Notes Programmes adopt a two-tier dealership scheme. The HKMA has appointed Recognised Dealers and Market Makers to support, with different degrees of commitment, the development of the Exchange Fund Bills and Notes market. Recognised Dealers are financial institutions maintaining Securities Accounts with the HKMA for holding Exchange Fund papers. Market Makers, appointed from the pool of Recognised Dealers, are responsible for maintaining liquidity in the secondary market. In particular, they undertake to quote two-way prices upon request during normal trading hours of Exchange Fund paper. From 3 July 2007, only the most active Market Makers, determined based on criteria set by the HKMA, are appointed Eligible Market Makers and invited to participate in the primary market.

Current lists of Eligible Market Makers for EFBN Programme and Contributors to the HKMA EFBN Indicative Pricings (PDF File, 20KB)

Current list of Recognised Dealers and Market Makers (PDF File, 55KB) (Excel File, 39KB).

Exchange Fund Bills and Notes Indicative Pricings

The HKMA publishes indicative pricings for Exchange Fund Bills and Notes two times a day. The indicative pricings are calculated daily by Reuters based on indicative bid and ask quotes as at 11:00 a.m. and 4:00 p.m. (Hong Kong time) provided by 12 Eligible Market Markers designated by the HKMA (PDF File, 12KB). Exchange Fund Bills are quoted based on yields and Exchange Fund Notes are quoted based on prices. The indicative price for each of the benchmarks is calculated by taking the arithmetic mean of the middle eight quotes from the Market Makers, after excluding the two highest and the two lowest quotes. The Indicative Pricings are calculated and published via major news wire agencies at 11:30 a.m. and 4:30 p.m. (Hong Kong time) on every trading day of Exchange Fund Bills and Notes. In addition, indicative mid-yield and mid-price quotes are posted for off-the-run Exchange Fund Bills and Notes issues respectively.

For more details, please refer to the Reference Manual of Exchange Fund Bills and Notes Indicative Pricings (PDF File, 51KB).

Use of Exchange Fund Paper as Margin Collateral

The Hong Kong Futures Exchange has accepted Exchange Fund papers as margin collateral for trading in stock options and futures since 13 December 1999. Exchange Fund papers can be used as collateral in Hong Kong dollar repurchase transactions. The use of Exchange Fund papers as collateral for a wide range of products increases the liquidity of the Hong Kong dollar fixed-income market and helps reduce systemic risk.

Last revision date: 31 December 2018
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