Citibank (China) Co. Ltd. (Citi China) has successfully executed the first batch of Northbound Swap Connect transactions with offshore investors. Citi China is one of the first batch of Northbound Swap Connect market makers.
Northbound Swap Connect provides offshore investors with a convenient way to participate in the onshore renminbi (RMB) interest rate swap market. Offshore investors can directly quote prices from onshore market makers through overseas e-trading platforms and execute transactions. On the transaction day, a bilateral transaction will be novated to Shanghai Clearing House (SHCH) and Hong Kong OTC Clearing Co., Ltd. (OTCC) after a compliance check, which then enters central clearing for both the onshore market maker and offshore investor.
As the most important and prevailing derivative product in the RMB interest rate market, RMB interest rate swap is an important tool for onshore and offshore investors to manage RMB interest rate risk. The onshore interest rate swap market will appeal more to offshore investors to participate in, with the launch of the Northbound Swap Connect.
Yang Ji, executive vice president of Citi China and general manager of Citi China Global Markets, said: "Northbound Swap Connect' is another milestone in the connection and cooperation of financial infrastructures between the Mainland and Hong Kong after the 'Bond Connect' programme, which shows great significance for promoting the onshore financial derivatives market and building a high-level financial open-up. Citi China has been deeply involved in the onshore financial market, and has provided offshore investors with high-quality market-making quotations and custody services under Bond Connect, CIBM and QFII schemes. We will continuously leverage the advantages of Citi’s cross-border business, focus on customer service and business promotion, and contribute to the development of the onshore financial market.”
Re-disseminated by The Asian Banker