Recently, Huatai Financial Holdings (Hong Kong) Limited has participated in the central clearing business for RMB interest rate swaps under the CIBM Direct model. Bank of China, acting as a comprehensive clearing member of Shanghai Clearing House and a settlement agent in the interbank bond market, facilitated the successful execution of this central clearing business for RMB interest rate swaps by Huatai Financial Holdings (Hong Kong).
The central clearing service for RMB interest rate swaps was launched in 2014. It clears fixed-for-floating interest rate swap transactions executed through China Foreign Exchange Trade System, with underlying rates covering FR007, Shibor O/N, Shibor_3M, and LPR 1Y. Shanghai Clearing House acts as the central counterparty through contract novation and conducts clearing and settlement via multilateral netting and a layered clearing approach, playing a pivotal role in risk management, cost control, and liquidity management.
As the internationalization of the RMB progresses further, China's bond market is becoming increasingly attractive to foreign investors, whose demand for interest rate risk management is both growing and becoming more sophisticated. Huatai Financial Holdings (Hong Kong) now participates in central clearing for interest rate swaps through both the "Swap Connect" program and the CIBM Direct agency model. This achievement marks the establishment of a "dual-channel" pathway for accessing onshore interest rate derivatives, enabling more integrated and coordinated development of its domestic and overseas interest rate derivatives business. Concurrently, it contributes to expanding the base of foreign investors in the interbank interest rate derivatives market, deepens the linkage between onshore and offshore RMB derivatives markets, and supports the opening-up of China's interbank derivatives market. Furthermore, Bank of China's assistance in executing this transaction for Huatai Financial Holdings (Hong Kong) represents the market's first instance of a single financial institution providing a "one-stop" service package—encompassing price quotation, agency trading, and agency central clearing via Shanghai Clearing House—to an overseas institutional financial client. This significantly enhances the efficiency for foreign institutions investing in China's interbank market.
Moving forward, under the guidance of the People's Bank of China, Shanghai Clearing House will continue to actively leverage its professional strengths as financial market infrastructure and its role as a bridge and link. It aims to deepen the international "dual-engine" strategy of "Swap Connect + direct clearing" for RMB derivatives, effectively serve global market participants in managing RMB transaction risks, attract more foreign investors to China's bond and derivatives markets, strongly support high-level financial opening-up, and steadily and solidly advance the process of RMB internationalization.
