PBoC, HKMA approve southbound trading under Bond Connect

The move aims to promote the development of the bond markets in Mainland China and Hong Kong.

The People's Bank of China (PBoC) and the Hong Kong Monetary Authority (HKMA) have approved southbound trading under Bond Connect, which will launch on 24 September.

The China Foreign Exchange Trade System (National Interbank Funding Center), China Central Depository & Clearing Co., Ltd., Shanghai Clearing House, eligible custodian banks of Mainland institutional investors, CIPS Co., Ltd., together with Hong Kong Exchanges and Clearing Limited and Central Moneymarkets Unit of the HKMA and custodian banks of Hong Kong will collaborate on the mutual bond market access between Hong Kong and China.

Southbound trading under Bond Connect is an arrangement that will enable Mainland institutional investors to invest in the Hong Kong bond market through the connection between the Mainland and Hong Kong financial infrastructure services institutions. It is also a measure of the central government to support Hong Kong's development and deepen cooperation, which will abide by the relevant laws and regulations of the bond markets of the Mainland and Hong Kong.

Regulators of the Mainland and Hong Kong bond markets will respectively take all necessary measures to establish, in the interest of investor protection, effective mechanisms under Southbound Trading under Bond Connect to respond to any misconduct promptly. They will amend the memorandum of understanding on supervisory cooperation to enhance supervisory cooperation arrangements and liaison mechanisms to maintain the stability of financial markets and fair trading.