Group 1: Economic Growth and Financial Center Status - Hong Kong aims to strengthen its stock market and deepen financial connectivity with mainland China to accelerate new economic growth points and opportunities [1][2] - In the latest Global Financial Centers Index, Hong Kong ranks third globally and first in Asia, with a narrow score difference from the top two centers [1] - The average daily trading volume in Hong Kong's stock market exceeded HKD 250 billion in the first nine months of the year, doubling from the previous year [1] Group 2: Stock Market and Capital Raising - New stock fundraising in Hong Kong reached over HKD 180 billion by the end of September, marking a year-on-year increase of over 200%, making it the highest globally [1] - The Hong Kong government will assist mainland tech companies in financing through a newly established "Tech Enterprise Line" and encourage Chinese companies listed overseas to return to Hong Kong [1] Group 3: Connectivity with Mainland Financial Markets - The average daily trading volume for northbound trading under the Stock Connect exceeded RMB 200 billion, while southbound trading averaged over HKD 1.2 billion [2] - Hong Kong plans to include RMB trading counters in the Stock Connect and encourage more companies to increase RMB stock trading counters [2] Group 4: Offshore RMB Business Center - Hong Kong processes approximately 75% of global offshore RMB payments, with RMB deposits reaching around CNY 1 trillion by the end of August [2] - The government aims to optimize RMB liquidity arrangements to enhance the offshore RMB market's hub function [2] Group 5: Green and Sustainable Finance - In the previous year, Hong Kong issued green and sustainable bonds totaling approximately USD 43 billion, accounting for about 45% of the total in Asia, maintaining its leading position for seven consecutive years [3] Group 6: Collaboration with the Greater Bay Area - Hong Kong will strengthen its collaboration with the Greater Bay Area's carbon market, testing cross-border trading settlement paths [4]

Core Viewpoint - The Hong Kong Securities and Futures Commission (SFC) plans to advance a series of key initiatives over the next six months to enhance the fixed income and currency markets in Hong Kong, focusing on four main pillars: promoting issuance, increasing liquidity, expanding offshore RMB business, and developing new generation infrastructure [1][2] Group 1: Key Initiatives - The SFC aims to attract more local and overseas issuers to utilize Hong Kong as a financing hub, thereby promoting issuance [1] - To increase liquidity, the SFC will implement an over-the-counter fixed income and currency derivatives system and promote the development of a central counterparty for repurchase transactions in Hong Kong [2] - The expansion of offshore RMB business will involve enhancing the application of offshore RMB, improving connectivity mechanisms, and increasing the supply of RMB-related products [2] Group 2: Infrastructure Development - The SFC will prepare for infrastructure development in the fixed income and currency markets to support the new generation of electronic trading platforms [2] - The application of tokenized fixed income and currency products will be implemented as part of the new generation infrastructure initiatives [2]

Core Viewpoint - The Hong Kong Securities and Futures Commission (SFC) plans to advance a series of key initiatives over the next six months to enhance the fixed income and currency markets in Hong Kong, focusing on four main pillars: promoting issuance, increasing liquidity, expanding offshore RMB business, and developing new generation infrastructure [1][2] Group 1: Promotion of Issuance - The SFC aims to attract more local and overseas issuers to utilize Hong Kong as a financing hub [1] - The government will lead market development through the issuance of government bonds [1] - Efforts will be made to promote Hong Kong's advantages to target market issuers and investors [1] Group 2: Increasing Liquidity - The SFC plans to implement an over-the-counter fixed income and currency derivatives system to enhance liquidity [2] - Development of a central counterparty for repurchase transactions in Hong Kong is also a focus [2] - Tools will be provided to issuers and investors to manage financing, liquidity, and risk [1] Group 3: Expanding Offshore RMB Business - The SFC intends to expand the application of offshore RMB and improve the connectivity mechanism to enhance offshore RMB liquidity [2] - There will be an increase in the supply of RMB-related products [2] Group 4: New Generation Infrastructure - The SFC will prepare for infrastructure development in the fixed income and currency markets to support new electronic trading platforms [2] - The application of tokenized fixed income and currency products will be implemented [2] - This initiative aims to solidify Hong Kong's position as a leading international financial center [1]

Core Points - The Hong Kong Monetary Authority (HKMA) has officially implemented the "Renminbi Business Funding Arrangement" as of October 9, 2023, aimed at enhancing the use of Renminbi in offshore markets [1][3] - The arrangement replaces the previous "Renminbi Trade Financing Liquidity Arrangement" and is being rolled out in three phases to ensure sufficient liquidity for expanding offshore Renminbi business [3] Company Insights - Bank of China (Hong Kong) has initiated the first batch of funding arrangements, providing Renminbi trade financing to multiple enterprises in Hong Kong, including support for a mainland company operating in Indonesia and a local company in Cambodia [1][3] - The bank's Vice President, Wang Huabin, reported that the volume of Renminbi financing business increased by over 30% year-on-year in the first three quarters of 2025, indicating a significant rise in demand for Renminbi in cross-border operations [3] Industry Implications - The new funding arrangement simplifies transaction processes and offers longer financing term options for enterprises, thereby injecting new momentum into the offshore Renminbi market [3] - The initiative is expected to benefit more enterprises "going global" by allowing participating banks to provide Renminbi trade financing services through their overseas branches [3]

Core Insights - The International Bank for Settlements has released a survey indicating that Hong Kong remains the fourth largest foreign exchange center globally and the largest offshore renminbi business hub [1] Foreign Exchange Market - The average daily trading volume of foreign exchange in Hong Kong increased by 27.2%, rising from $694.4 billion in April 2022 to $883.1 billion in April 2025 [1] - Foreign exchange swap contracts are the most actively traded instruments, accounting for 64% of the average daily trading volume, which amounts to $563.7 billion [1] Offshore Renminbi Market - Hong Kong maintains its position as the largest offshore renminbi foreign exchange and over-the-counter interest rate derivatives center [1] - The average daily trading volume of renminbi foreign exchange transactions surged by 64.8%, increasing from $191.2 billion in April 2022 to $315.1 billion in April 2025 [1] - The average daily trading volume of renminbi over-the-counter interest rate derivatives also rose by 67.1%, from $14.7 billion in April 2022 to $24.5 billion in April 2025 [1] Over-the-Counter Interest Rate Derivatives - The average daily trading volume of over-the-counter interest rate derivatives in Hong Kong reached $84.1 billion in April 2025 [1] - The most actively traded over-the-counter interest rate derivatives in the Hong Kong market are denominated in US dollars, renminbi, and Australian dollars [1]

Core Insights - The International Bank for Settlements has released a survey indicating that Hong Kong remains the fourth largest foreign exchange center globally and the largest offshore renminbi business hub [1][3] Foreign Exchange Market - Hong Kong's average daily foreign exchange trading volume increased by 27.2% from $694.4 billion in April 2022 to $883.1 billion in April 2025, driven primarily by increases in foreign exchange swaps, spot transactions, and over-the-counter options [3] - Foreign exchange swaps are the most actively traded instruments, accounting for 64% of the average daily trading volume [3] Offshore Renminbi Market - Hong Kong maintains its position as the largest offshore renminbi foreign exchange and over-the-counter interest rate derivatives center, with average daily renminbi foreign exchange trading volume rising by 64.8% from $191.2 billion in April 2022 to $315.1 billion in April 2025 [3] - The average daily trading volume of renminbi over-the-counter interest rate derivatives also increased by 67.1%, from $14.7 billion in April 2022 to $24.5 billion in April 2025 [3] Interest Rate Derivatives - The average daily trading volume of over-the-counter interest rate derivatives in Hong Kong reached $84.1 billion in April 2025, with the most active instruments being denominated in US dollars, renminbi, and Australian dollars [3]

Core Insights - The International Bank for Settlements reported that Hong Kong remains the fourth largest foreign exchange center globally and the largest offshore RMB business hub as of September 30, 2023 [1] Foreign Exchange Market - Hong Kong's average daily foreign exchange trading volume increased by 27.2% from $694.4 billion in April 2022 to $883.1 billion in April 2025 [1] - The growth in foreign exchange trading was primarily driven by increases in foreign exchange swaps (+33.0% or $139.8 billion), spot transactions (+28.7% or $38.5 billion), and OTC options (+165.4% or $31.4 billion) [1] - Foreign exchange swaps are the most actively traded instruments, accounting for 64% ($563.7 billion) of the average daily trading volume [1] Offshore RMB Market - Hong Kong maintains its position as the largest offshore RMB foreign exchange and OTC interest rate derivatives center [1] - The average daily trading volume of RMB foreign exchange increased by 64.8% from $191.2 billion in April 2022 to $315.1 billion in April 2025 [1] - The average daily trading volume of RMB OTC interest rate derivatives also rose by 67.1% from $14.7 billion in April 2022 to $24.5 billion in April 2025 [1] OTC Interest Rate Derivatives - As of April 2025, the average daily trading volume of OTC interest rate derivatives in Hong Kong reached $84.1 billion, with USD, RMB, and AUD being the most actively traded currencies in this market [1]

Core Points - The Hong Kong Monetary Authority (HKMA) is launching a new "Renminbi Business Funding Arrangement" starting October 9, replacing the existing "Renminbi Trade Financing Liquidity Arrangement" [1][3] - The new arrangement will be implemented in three phases, with the first phase allowing banks to use the new funding arrangement at lower interest rates [1][3] - The HKMA has increased the daytime Renminbi funding limit from 20 billion to 30 billion, while reducing the overnight limit from 20 billion to 10 billion [3] Group 1 - The new arrangement aims to better meet the increasing demand for cross-border Renminbi payment settlements [3] - The HKMA's measures are designed to ensure sufficient liquidity in the market to expand offshore Renminbi business [3][4] - The introduction of two-week and one-month term repurchase agreements will provide banks with greater flexibility in managing funds [3] Group 2 - The HKMA's president emphasized the importance of these measures in promoting the use of offshore Renminbi in the real economy [3] - The Hong Kong Banking Association supports the expansion of offshore Renminbi business and encourages close communication with regulatory bodies [3][4] - The optimization measures are expected to enhance the strategic advantages for enterprises closely linked to the mainland market, aiding in managing financing costs [4]

Core Viewpoint - The Hong Kong Monetary Authority (HKMA) announced the optimization of the Renminbi liquidity arrangement to better meet the liquidity demands arising from the growth of offshore Renminbi business, effective from October 9, 2025 [1][3]. Summary by Sections Optimization Measures - The HKMA will replace the existing Renminbi Trade Financing Liquidity Arrangement with the "Renminbi Business Liquidity Arrangement," maintaining a total liquidity amount of 40 billion Renminbi, redistributing it to 30 billion Renminbi for daytime and 10 billion Renminbi for overnight liquidity [3]. - New T+1 repurchase agreements with two-week and one-month terms will be introduced, alongside existing one-day and one-week options, with rates referencing current market rates [3]. Implementation Phases - **Phase 1 (Effective October 9, 2025)**: Banks will access the new arrangement at lower rates, based on the Shanghai Interbank Offered Rate, eliminating a previous 25 basis point premium. The arrangement will also allow banks to provide Renminbi trade financing through overseas branches [4]. - **Phase 2 (Effective December 1, 2025)**: Specific Renminbi capital expenditure and working capital loans will be included in the eligible business scope, enhancing predictability and stability in Renminbi funding costs for banks [5]. - **Phase 3 (Effective February 2, 2026)**: Introduction of a third-party repurchase service by the Central Moneymarkets Unit (CMU), allowing banks to change collateral during the repurchase period, transitioning to a more automated operation [5]. Market Context - The HKMA noted significant growth in offshore Renminbi business, with the loan-to-deposit ratio for Renminbi in the banking sector rising from approximately 20% in September 2022 to over 90% by June 2025, indicating increasing demand for long-term Renminbi loans [7]. - The HKMA's measures aim to ensure sufficient liquidity in the market to support the expansion of offshore Renminbi business and promote its use in the real economy [8].

Core Viewpoint - The Hong Kong Monetary Authority (HKMA) announced optimization measures for the offshore RMB liquidity arrangement, effective from October 9, 2025, to better meet the liquidity demands arising from the growth of offshore RMB business [2][4]. Summary by Sections Optimization Measures - The HKMA will replace the existing "RMB Trade Financing Liquidity Arrangement" with the "RMB Business Liquidity Arrangement," implementing several optimization measures [4]. - The daily and overnight RMB liquidity limits will be adjusted from 200 billion RMB each to 300 billion RMB for daily and 100 billion RMB for overnight, maintaining a total of 400 billion RMB [4][5]. - New T+1 repo agreements for two-week and one-month terms will be introduced, alongside existing one-day and one-week options, providing banks with greater flexibility in managing funds [5]. Implementation Phases - The optimization will be rolled out in three phases: - **Phase 1** (Starting October 9, 2025): Banks will access RMB liquidity at lower rates, based on the Shanghai Interbank Offered Rate, eliminating a previous 25 basis points premium [7]. - **Phase 2** (Starting December 1, 2025): Specific RMB capital expenditures and working capital loans will be included in the eligible business scope, enhancing predictability and stability in RMB funding costs for banks [8]. - **Phase 3** (Starting February 2, 2026): Introduction of a third-party repo service by the Central Moneymarkets Unit (CMU), allowing banks to automate collateral management and enhance market liquidity [8]. Support for Offshore RMB Business - The HKMA's measures aim to support the robust growth of offshore RMB business, with indicators showing a significant increase in the demand for RMB as a financing currency [11]. - The loan-to-deposit ratio for RMB in the banking sector rose from approximately 20% in September 2022 to over 90% by June 2025, indicating a growing demand for long-term RMB loans [11]. - The HKMA's initiatives are designed to ensure sufficient liquidity in the market to expand offshore RMB business and promote its use in the real economy [11][12].