Bloomberg Professional Services

Bloomberg Collaborates with CFETS to Launch New Solution to Facilitate Swap Connect Trading

May 05, 2023

The solution enables offshore market participants to seamlessly trade on the new derivative link without disruption to current workflow

Shanghai, Hong Kong – Bloomberg will launch a solution[1] on May 15, 2023 to facilitate eligible offshore market participants’ trading in interest rate swaps (IRS) via Swap Connect, a new derivative trading link between Mainland China and Hong Kong. This new solution has connectivity with the China Foreign Exchange Trade System (National Interbank Funding Center) (“CFETS”).

The People’s Bank of China (“PBOC”) unveiled the interim management rules of Swap Connect on April 28, 2023. Northbound Swap Connect trading offers offshore investors access to China’s onshore interbank derivatives markets and will commence on May 15, 2023.

Zhang Yi, President of CFETS said, “the official launch of Swap Connect will deepen and broaden the opening-up of China’s financial markets. We are very pleased to again work closely with Bloomberg on Swap Connect – this time, expanding our collaboration to include derivative markets via an existing, well-established connectivity between CFETS and Bloomberg, to meet global investors’ demand for RMB derivatives in onshore China. CFETS will continue to provide reliable and efficient infrastructure services for investors, and to make China’s financial markets more accessible to a global investor base.”

“Swap Connect is an important new milestone in the evolution of China’s financial markets and promises to unlock the potential of derivatives markets. This development underscores the unique importance of Hong Kong’s place in the financial ecosystem, serving as a key conduit within global markets,” said Bing Li, Head of Asia Pacific at Bloomberg.

“As global investors participate in China’s financial markets through various channels, they have been anticipating the availability of more investment instruments to hedge risk and diversify portfolios. Bloomberg is delighted to offer solutions to support this new trading link and proud to play our part in the healthy development of global financial markets,” Li said.

Bloomberg is a PBOC approved third-party electronic trading solutions provider for northbound Swap Connect. The Bloomberg Swap Connect solution supports all financial instruments eligible in the Swap Connect scheme, which use reference interest rates including FR007 (7-day fixing repo rate), SHIBOR 3M (Shanghai Interbank Offered Rate 3 Months) and SHIBOR O/N (overnight SHIBOR). It is built and based on Bloomberg’s IRS Trading Portal (BBTI), a function in the BLOOMBERG TERMINAL® service, widely used by interest rate swap traders globally. Eligible offshore investors can use BBTI <GO> to send a Request-for-Quote (RFQ) to CFETS and to receive quotes from user-selected Swap Connect onshore dealer(s). The solution offers a seamless trading experience, including visibility of clearing status for a trade and the ability to execute trades based on trading agreements and pre-defined rules in the event of a trade rejected by the CCP(s).

Bloomberg provides a range of powerful trading and trade-related solutions around the world. It also offers full suite of solutions for China’s bond market and cross-border investment. For more information, please visit RMB<GO> in the Bloomberg Terminal.

 

[1] The Bloomberg Swap Connect solution is provided to investors in Hong Kong by Bloomberg Tradebook Hong Kong Limited.

 

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Irene Gu, igu3@bloomberg.net, +86-10-6649-7535
Rob Koh, rkoh22@bloomberg.net, +852-2977-2101

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