On the 7th, the People's Bank of China, the Hong Kong Monetary Authority, and the Securities and Futures Commission of Hong Kong announced 11 new measures to deepen cooperation between the financial markets of Hong Kong and mainland China. These measures aim to jointly build a Hong Kong fixed income and currency electronic trading platform, expand and optimize the RMB business fund arrangements of the Hong Kong Monetary Authority.
On the same day, the Hong Kong Gold Central Clearing and Settlement System also launched trial operations, providing bilateral and over-the-counter gold trading clearing and settlement services. The series of measures introduced intensively sends a clear signal: the country strongly supports Hong Kong in consolidating its position as an international financial center, and Hong Kong's diversified financial market will usher in new development opportunities.
Optimize and upgrade the interconnection mechanism
Expanding the connectivity between the financial markets of mainland China and Hong Kong is conducive to amplifying the unique advantages of Hong Kong's internal and external connectivity, attracting overseas capital to layout in the mainland market, and facilitating the global allocation of mainland funds. Among the 11 new measures mentioned above, 6 are related to the optimization and upgrading of Hong Kong's fixed income and money market construction, as well as the interconnection mechanism between the two places.
It is reported that the China Foreign Exchange Trading Center and the Hong Kong Stock Exchange will jointly build a Hong Kong fixed income and currency electronic trading platform, based in Hong Kong and facing the international market, providing an open, fair, efficient, and stable trading platform.
The measures also increased the annual net investment quota of Bond Connect "South Link" to 800 billion yuan, included it in the scope of repurchase support, expanded the product scope to Hong Kong dollar bonds and RMB bond related products, and radiated the Macao bond market; Support overseas investors to use onshore treasury bond bonds and policy financial bonds held through Bond Connect "Beixiangtong" as performance collateral of Hong Kong Futures Clearing House and SEHK Options Clearing House, and extend the settlement time of "Beixiangtong". Upgrading multiple mechanisms can help break down barriers to cross market circulation and access.
Promote the development of Hong Kong's offshore RMB market
Among the 11 new measures mentioned above, 5 directly support the development of Hong Kong's offshore RMB market, which will help consolidate Hong Kong's position as a global offshore RMB business hub and steadily promote RMB internationalization.
Hong Kong is an important hub for cross-border RMB settlement, handling over 70% of global cross-border RMB settlements. The measures propose to expand and optimize the funding arrangement for the Hong Kong Monetary Authority's RMB business, with the total amount increasing to RMB 500 billion from July 10th, and adding nine month, two-year, and three-year terms. This means providing a more stable funding guarantee for the offshore RMB market in Hong Kong, meeting the medium and long-term business needs of the capital market.
When it comes to future deployment, Pan Gongsheng, the Governor of the People's Bank of China, expressed support for Hong Kong to build a deeper RMB asset pool and promote the RMB to settle in the offshore market of Hong Kong. We will continue to issue central bank bills on a regular basis, and support the Ministry of Finance of China to further increase the issuance scale of offshore RMB treasury bond bonds, enrich the issuance period, and enhance the radiation of Hong Kong's offshore RMB market.
Improve Hong Kong's gold trading infrastructure
Launching the Hong Kong Gold Central Clearing and Settlement System, collaborating with the Shanghai Gold Exchange to implement the first phase of "physical connectivity", launching the Hong Kong gold price code "HAU", expanding storage capacity, and enhancing refining capacity are measures that will help enhance Hong Kong's competitiveness and influence in the global international gold market. The Financial Secretary of the Hong Kong Special Administrative Region Government, Paul Chan, pointed out that the trial operation of the Central Clearing and Settlement System for Gold is an important step in developing Hong Kong's gold trading infrastructure.
The author believes that Hong Kong's construction of a full chain ecosystem from clearing, pricing to warehousing and refining is also a practical action in line with the national "15th Five Year Plan" to support Hong Kong in building a commodity trading ecosystem and a high value-added supply chain service center.
If gold is a safe haven for global funds, Hong Kong will be its safe haven. "As Hong Kong Chief Executive Carrie Lam has said, Hong Kong has always maintained a superior position in the international financial services sector. With the joint efforts of all sectors, the delineation of Hong Kong's gold trading ecosystem will be trusted by the world. (Looking into the New Era)