Core Insights - The "Swap Connect" has become a significant channel for foreign institutional investors to manage RMB interest rate risks since its launch, with increasing trading volumes reported [1] Group 1: Trading Activity - As of September 2025, 83 domestic and foreign investors from 15 countries and regions have participated in the "Swap Connect," achieving a total of 16,000 transactions with a nominal principal of 8.58 trillion RMB [1] - In the third quarter of this year, the nominal amount cleared through the "Swap Connect" reached 1.4 trillion RMB, representing a quarter-on-quarter growth of 25% [1] Group 2: Future Developments - The "Swap Connect" will accelerate its development in 2025 with several optimization measures, including an increase in the daily net limit to 45 billion RMB starting October 13, 2025 [1] - The maximum remaining term for interest rate swap contracts will be extended to 30 years, and the reference rates will be expanded to include the one-year Loan Prime Rate (LPR 1Y) [1] - The range of eligible collateral will be broadened to include onshore government bonds and policy financial bonds [1] Group 3: Market Support - To better meet the needs of foreign investors in managing RMB interest rate risks, a dynamic adjustment mechanism for "Swap Connect" quote providers has been established under the guidance of the People's Bank of China [1] - Recently, three new "northbound swap connect" quote providers have been added, expanding the total number of quote providers to 23 institutions, which enhances market liquidity and the attractiveness of RMB assets for global investors [1]

Core Viewpoint - The China Foreign Exchange Trading Center is optimizing the "Swap Connect" mechanism to enhance market vitality and better meet the needs of foreign investors in managing RMB interest rate risks [1] Group 1: Mechanism Enhancements - A dynamic adjustment mechanism for "Swap Connect" quote providers will be established, and the number of quote providers will be expanded [1] - A daily net limit dynamic assessment mechanism will be improved, with the daily net limit increased to 45 billion RMB starting from October 13, 2025 [1] Group 2: Market Impact - Since its launch on May 15, 2023, "Swap Connect" has provided a convenient and efficient tool for foreign investors to manage interest rate risks associated with RMB asset allocation [1] - As of the end of August 2025, 82 foreign investors from 15 countries and regions have conducted over 15,000 RMB interest rate swap transactions, with a nominal principal amount of 8.15 trillion RMB [1]

Core Viewpoint - The introduction of interest rate swap contracts based on the one-year Loan Prime Rate (LPR1Y) under the "Northbound Swap Connect" aims to enhance risk management tools for overseas investors and meet their diverse interest rate risk management needs [1][2]. Group 1: Market Development - Since its launch on May 15, 2023, the "Swap Connect" has been operating smoothly, becoming an important channel for overseas institutional investors to manage RMB interest rate risk [2]. - As of the end of August 2025, 82 overseas financial institutions from 15 countries and regions have conducted over 15,000 RMB interest rate swap transactions, totaling a nominal principal of approximately 8.15 trillion RMB [2]. Group 2: Infrastructure and Operations - The collaboration between the China Foreign Exchange Trading Center, Shanghai Clearing House, and Hong Kong's OTC Clearing Limited has facilitated the seamless execution and clearing of transactions under the "Northbound Swap Connect" [1][2]. - The dual Central Counterparty (CCP) interconnection and single resource pool arrangement have reduced participation complexity for domestic and foreign investors while effectively managing systemic risks [2]. Group 3: Future Outlook - The three-party infrastructure will continue to work closely with market participants under the guidance of regulatory authorities to enrich "Swap Connect" products and enhance the risk management framework [3].

Core Viewpoint - The Hong Kong Stock Exchange (HKEX) announced a joint statement from the People's Bank of China, the Hong Kong Securities and Futures Commission, and the Hong Kong Monetary Authority regarding the deepening of "Swap Connect" cooperation, aimed at enhancing the management of RMB interest rate risks for overseas investors [1] Group 1 - The Hong Kong OTC Clearing Limited, a subsidiary of HKEX, will collaborate with the China Foreign Exchange Trade System and the National Interbank Funding Center to enrich the product tenors and types under the "Swap Connect" framework [1] - The optimization measures include extending the interest rate swap contract tenors to 30 years, catering to the diverse risk management needs of market institutions [1] - The product spectrum will be expanded to include interest rate swap contracts referencing the Loan Prime Rate (LPR) [1]