SFC and HKMA Endorse PBoC’s New Measure on Northbound Swap Connect

    The Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) have expressed their support for the People’s Bank of China’s (PBoC) newly introduced measure concerning the Northbound Swap Connect margin collateral arrangement. This initiative is designed to bolster market stability and enhance cross-border financial collaboration, according to

    Enhancing Market Stability

    The PBoC’s latest measure aims to refine the margin collateral framework within the Northbound Swap Connect, a mechanism that allows offshore investors to participate in Mainland China’s financial derivatives market. By optimizing the margin collateral process, the PBoC intends to mitigate risks and promote a more stable financial environment.

    Support from Financial Authorities

    Both the SFC and HKMA have welcomed this development, highlighting its potential to strengthen financial ties between Hong Kong and Mainland China. The SFC noted that the measure aligns with their ongoing efforts to enhance the robustness of Hong Kong’s financial infrastructure. Similarly, the HKMA emphasized the importance of such initiatives in fostering a secure and efficient market environment.

    Broader Implications

    This move by the PBoC is seen as part of a broader strategy to integrate China’s financial markets with global systems. By facilitating smoother cross-border transactions and reducing systemic risks, the new measure is expected to attract more international investors to the Chinese derivatives market.

    In recent years, there has been a concerted effort by Chinese authorities to open up the country’s financial markets to foreign participation. Initiatives such as the Bond Connect, Stock Connect, and now the Northbound Swap Connect are pivotal in this strategy. The latest measure on margin collateral is expected to further these efforts by ensuring a more stable and attractive market for global investors.


    The endorsement from the SFC and HKMA underscores the significance of the PBoC’s measure in promoting financial stability and enhancing cross-border financial cooperation. As China continues to open its markets, such regulatory advancements are crucial in maintaining investor confidence and fostering sustainable growth.

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