Core Viewpoint - The article discusses the recent measures announced by the People's Bank of China and the Hong Kong Monetary Authority to optimize and expand the Bond Connect program, emphasizing the importance of the offshore RMB fixed income market as a strategic focus for the Hong Kong Securities and Futures Commission [1][3]. Summary by Sections Bond Connect Optimization and Expansion - The measures include expanding the range of participating institutions in the southbound trading, allowing brokers, insurance companies, wealth management, and asset management companies to join [3]. - The optimization of offshore RMB bond repurchase business will allow bonds to be reused as collateral during the repurchase period, enhancing liquidity for foreign investors [3]. Development of RMB Fixed Income Market - The Hong Kong Securities and Futures Commission is prioritizing the development of the RMB fixed income market, especially in light of discussions around the dominance of USD assets, which has led investors to reallocate assets to diversify risks [3]. - In the past year, the use of onshore bonds held by foreign investors as collateral in Hong Kong has increased, with the scale of onshore government bonds accepted as collateral reaching 30 billion RMB [3]. Increasing Primary Market Issuance - The first strategic direction is to increase the issuance of fixed income products in the primary market and enrich the supply of RMB products, with offshore RMB bond issuance in Hong Kong surpassing 1 trillion RMB in 2024, a 37% year-on-year increase [6]. - The issuance of government bonds in Hong Kong is expected to increase, with a focus on mid- to long-term bonds [6]. Enhancing Secondary Market Liquidity - The second strategic direction is to enhance liquidity in the secondary bond market, with support for the development of more attractive and diverse derivative products [8]. - The average daily trading volume of USD/RMB futures has tripled in 2023, indicating robust growth in the derivatives market [8]. Establishing Offshore RMB Product Infrastructure - The third strategic direction involves researching and establishing optimized infrastructure for offshore RMB products, including trading systems and supporting systems [9]. - Collaboration with Omniclear aims to expand the use of government bonds as eligible collateral for various products on the Hong Kong Stock Exchange [9]. Conclusion on RMB Internationalization - The article concludes that RMB internationalization is a long-term strategy for high-level financial openness and a pillar for building a strong financial nation, with Hong Kong positioned as a leading offshore RMB business hub [9].

Core Viewpoint - The Hong Kong Securities and Futures Commission (SFC) is focusing on the development of the fixed income and currency markets, with a particular emphasis on the RMB fixed income market, in response to the ongoing discussions about the dominance of USD assets and the need for investors to diversify their portfolios [2][3]. Group 1: Development of RMB Fixed Income Market - The SFC aims to increase the issuance of primary market fixed income products to enrich the supply of RMB products, with offshore RMB bond issuance in Hong Kong surpassing 1 trillion yuan in 2024, marking a 37% year-on-year increase [3]. - The Ministry of Finance has increased the frequency and scale of issuing government bonds in Hong Kong, particularly focusing on medium- to long-term bonds to meet international investors' needs [3]. - The SFC is working closely with mainland regulatory bodies to incorporate RMB stock trading counters into the Hong Kong Stock Connect, with technical preparations progressing smoothly [3][4]. Group 2: Enhancing Market Liquidity - The SFC is focused on improving the liquidity of the secondary bond market, which will provide issuers with more competitive pricing conditions and a broader investor base [3]. - The development of derivative instruments is deemed essential for bond investors to hedge risks and manage liquidity effectively [4]. Group 3: Infrastructure Development for Offshore RMB Products - The SFC supports financial institutions in developing more attractive and diversified derivative products, including interest rate, foreign exchange, and credit derivatives [4]. - There is an understanding of the market's expectation for the prompt launch of government bond futures, with ongoing collaboration with mainland regulatory authorities to advance preparations [4]. - The establishment of infrastructure for offshore RMB-related products, including front-end trading systems and back-end support systems, is being researched to enhance the stability of Hong Kong's financial system [4].