HKMA enhances offshore RMB bond repo business

HONG KONG, July 8 (Xinhua) -- The Hong Kong Monetary Authority (HKMA) on Tuesday announced enhancements to offshore Renminbi (RMB) bond repurchase (repo) business, to facilitate the participation of Northbound Bond Connect investors in the repo business.

The enhancements included supporting the rehypothecation of bond collaterals during the repo period and supporting cross-currency repo, including Hong Kong dollars, U.S. dollars and Euro. These arrangements will be officially launched on Aug. 25.

According to the HKMA, these two enhancement measures aimed to adopt international market best practices and enhance operational efficiency. They will further expand the depth and breadth of the offshore repo market, improve the market-based mechanism for offshore RMB liquidity management, and broaden the use of onshore RMB bonds as collateral in the offshore market.

Eddie Yue, HKMA chief executive, said that to further develop Hong Kong's bond market and enhance its attractiveness to issuers and global investors, efforts were being made to broaden the investor base and improve market liquidity.