CFETS and HKEX set to establish Bond Connect

The People’s Bank of China (PBC) and the Hong Kong Monetary Authority (HKMA) today jointly announced plans to establish a mutual market access scheme to connect the Mainland China and Hong Kong bond markets (Bond Connect).

Through the bridging of related Mainland and Hong Kong financial infrastructure institutions, investors in one market will be able to trade bonds in the other market. As the major operating entities of Bond Connect, China Foreign Exchange Trade System (CFETS) and Hong Kong Exchanges and Clearing Limited (HKEX) will oversee provision of investor admission and trading services for Bond Connect.

Bond Connect represents another significant breakthrough in the opening of the Mainland bond market and an important step in closer interaction and cooperation between the Mainland and Hong Kong, which will further strengthen Hong Kong’s position as an international financial centre.

In alignment with the current opening-up policy framework of the China Interbank Bond Market (CIBM), Bond Connect will provide a convenient market access conduit to improve client admission efficiency. Under this new arrangement, offshore investors will be able to access the CIBM conveniently via a “single link” through the mutual connectivity of related Mainland and Hong Kong financial infrastructure institutions to trade various Renminbi-denominated bonds available in the CIBM such as government bonds, financial bonds and corporate bonds.

CFETS and HKEX will continue to work closely under the guidance of PBC and HKMA and together with the market entities and custodian and settlement institutions in both markets to prepare for the launch of Bond Connect.

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