The Hong Kong Monetary Authority (HKMA) welcomes the launch of Bond Connect. Bond Connect is a new initiative for mutual access between the Hong Kong and Mainland bond markets through a cross-border platform that facilitates the efficient trading by overseas institutional investors in the Mainland bond market. Details can be found in the joint announcement made by the HKMA and the People’s Bank of China (PBoC) today.
Mr Norman Chan, Chief Executive of the HKMA, said, “Bond Connect marks another milestone in the liberalisation of the Mainland’s capital account. The implementation of Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect has greatly enhanced mutual access between the stock markets of Mainland and Hong Kong. The bond market constitutes another major component of the capital market. The Mainland now hosts the world’s third largest bond market with an outstanding amount of about RMB65 trillion. The less than 2% holding by overseas investors provides ample room for much stronger presence of overseas investors. Through Bond Connect platform, Hong Kong will serve as the gateway for overseas investors to enter the Mainland bond market, leveraging on our role as an international financial centre as well as an intermediary for capital flows between the Mainland and international markets.”
Bond Connect comprises two components, namely, settlement and trading. Settlement is conducted through the accounts opened respectively at China Central Depository & Clearing Co. Ltd. and Shanghai Clearing House by the HKMA’s Central Moneymarkets Unit (CMU). As CMU will handle the account opening procedures and compliance requirements, overseas investors will have greater flexibility and convenience when investing in the Mainland bond market. This will also generate greater demand for Hong Kong’s related financial services, such as custody and settlement, asset management, risk management, etc. Furthermore, Bond Connect will enhance trading efficiency by providing a new platform that supports direct trading between overseas investors and Mainland dealers.
“Hong Kong is Asia’s premier international financial centre. We are strategically positioned as the natural gateway linking our Mainland hinterland to the world. Bond Connect is another major move that uses the Hong Kong platform to strengthen the connectivity between the Mainland and global capital markets. The HKMA will work closely with PBoC and other relevant parties to finalise the arrangements and roll out Bond Connect as soon as possible,” Mr Chan added.
The HKMA and PBoC are coordinating with the relevant institutions in the two places to take forward the detailed technical preparations for Bond Connect. Further details, when available, will be announced in due course.
Hong Kong Monetary Authority
16 May 2017