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China to Start Swap Connect With Hong Kong in Six Months

  • New swap arrangement is subject to regulatory approvals
  • Follows Xi’s Hong Kong visit to mark 25 years of Chinese rule
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China to Start Interest-Rate Swap Connect With Hong Kong
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China will allow international investors to access its interest-rate derivatives market through Hong Kong, bolstering the city’s status as a financial gateway to Asia’s largest economy while giving foreign funds a new tool to hedge their holdings of Chinese bonds.

The so-called Swap Connect will start in six months, pending regulatory approvals, market readiness and the completion of operational arrangements, according to a joint statement by the People’s Bank of China and Hong Kong authorities. It will help investors manage risks for bond investments on the mainland, according to the Hong Kong Monetary Authority.