Overnight Index Swap

The Hong Kong Foreign Exchange and Money Market Practices Committee (MPC) announced that the Overnight Index Swap (OIS) has recently been launched in the Hong Kong dollar market. An OIS is a fixed/floating interest rate swap with the floating leg tied to a published index of an overnight reference rate. The Hong Kong Foreign Exchange and Deposit Brokers' Association has signed an agreement with Telerate, appointing the latter as the official calculator of the overnight reference rate.

"Market participants have shown a particular interest in developing an OIS market in Hong Kong," said Mr Tony Latter, Deputy Chief Executive of the Hong Kong Monetary Authority and the Chairman of the MPC. "OIS has already proved popular in Europe, and has been gaining acceptance in Asia. In response, the MPC, which seeks to promote and improve the efficiency and development of the foreign exchange and money markets in Hong Kong, co-ordinated a study on the development of OIS in Hong Kong, which has culminated in this launch."

Mr Latter further remarked that OIS provided a flexible hedging tool for banks and corporate treasurers. Such product innovation will be conducive to the further development of Hong Kong's financial markets.

For further enquiries, please contact:

Jasmin Fung, Manager (Press), at 2878 8246 or
Thomas Chan, Senior Manager (Press), at 2878 1480

Hong Kong Monetary Authority
30 July 2001