Hong Kong and Mainland Chinese authorities announced a package of bond-market and offshore renminbi measures on July 7, including an increase in the annual Southbound Bond Connect quota to RMB800 billion from RMB500 billion.
The package includes plans to develop repurchase transactions using Southbound Bond Connect holdings as collateral, expand eligible products to instruments with Hong Kong dollar and renminbi bond underlyings, connect the program to the Macao bond market through infrastructure links, and tighten management of designated market makers from this year. Authorities also said Hong Kong and Mainland financial market infrastructure institutions will work on a fixed-income and currency electronic trading platform in Hong Kong.
For Northbound Bond Connect, settlement hours will be extended through a direct linkage between Hong Kong’s Central Moneymarkets Unit and China Central Depository and Clearing to improve settlement efficiency. Onshore Chinese government bonds issued by the Ministry of Finance and Mainland policy bank bonds held through Northbound Bond Connect will be supported as eligible margin collateral at HKFE Clearing and the SEHK Options Clearing House. Swap Connect will add the interbank 7-Day Fixing Depository-Institutions Repo Rate, FDR007, as a reference rate, and authorities set August 3, 2026 as the target launch date for HKEX five-year China Government Bond futures.
Separately, the renminbi Business Facility in Hong Kong will be enlarged to RMB500 billion from RMB200 billion from July 10, with new 9-month, 2-year and 3-year tenors. Authorities also disclosed work on a 7-day offshore renminbi liquidity tender mechanism, offshore renminbi short-term debt issuance, an Indonesian rupiah-offshore renminbi transaction framework, and banking guidance on renminbi usage. Southbound Bond Connect was launched in 2021 as a channel for Mainland institutional investors to access the Hong Kong bond market through cross-border market infrastructure links.