Core Viewpoint - The expansion of the "Northbound Swap Connect" aims to enhance risk management tools for overseas investors and promote the internationalization of the Renminbi [1][2]. Group 1: Expansion of Northbound Swap Connect - On September 22, the Hong Kong Stock Exchange, in collaboration with the China Foreign Exchange Trade System and the Shanghai Clearing House, introduced interest rate swap contracts based on the one-year Loan Prime Rate (LPR1Y) under the "Northbound Swap Connect" [1]. - On the launch day, 31 domestic and foreign institutions participated, with a total of 53 transactions and a nominal principal amount of 6.46 billion RMB [1]. Group 2: Market Activity and Future Developments - Since its launch on May 15, 2023, the "Swap Connect" has been operating smoothly, with increasing trading activity, becoming a key channel for overseas institutions to manage Renminbi interest rate risks [2]. - As of August 2025, 82 foreign financial institutions from 15 countries and regions have completed over 15,000 Renminbi interest rate swap transactions, totaling approximately 8.15 trillion RMB in nominal principal [2]. - Starting September 22, the maximum term for existing Renminbi non-deliverable interest rate swap (CNY NDIRS) contracts has been extended from 5.5 years to 11 years to better assist overseas investors in managing interest rate risks [2].

Core Insights - The introduction of interest rate swap contracts referencing the one-year Loan Prime Rate (LPR1Y) under the "Northbound Swap Connect" aims to enhance risk management tools for overseas investors and promote the internationalization of the Renminbi [1][2] Group 1: Market Development - On the launch day, 31 domestic and foreign institutions participated, with a total of 53 transactions and a nominal principal amount of 6.46 billion RMB [1] - Since its launch on May 15, 2023, the "Swap Connect" has facilitated over 15,000 Renminbi interest rate swap transactions, totaling approximately 8.15 trillion RMB in nominal principal from 82 foreign financial institutions across 15 countries and regions by the end of August 2025 [1] Group 2: Investor Benefits - The addition of LPR as a reference rate allows international investors to seamlessly connect with the domestic interest rate derivatives market, enhancing their ability to manage interest rate risks associated with domestic investments [2] - The optimization measures of the "Swap Connect" are expected to attract more international investors to the domestic capital market, thereby accelerating the internationalization of the Renminbi [2] Group 3: Product Expansion - Starting from September 22, the maximum term for existing Renminbi non-deliverable interest rate swap (CNY NDIRS) contracts has been extended from 5.5 years to 11 years, providing better risk management options for overseas investors [3]

Core Viewpoint - The Hong Kong Stock Exchange (HKEX) has introduced a new interest rate swap contract based on the one-year Loan Prime Rate (LPR1Y) under the "Northbound Swap Connect" to meet the diverse needs of overseas investors [2][4]. Group 1: New Financial Instruments - The HKEX, in collaboration with the China Foreign Exchange Trade System and the Shanghai Clearing House, has launched the LPR1Y interest rate swap contract to enhance risk management tools for foreign investors [4]. - On the launch day, 31 domestic and foreign institutions participated, with a total of 53 transactions amounting to RMB 6.46 billion [4]. Group 2: Enhancing Risk Management - The introduction of LPR interest rate swaps will enrich the risk management tools available to overseas investors, addressing their diverse interest rate risk management needs and aiding in the internationalization of the RMB [5]. - The existing non-deliverable interest rate swap (CNY NDIRS) contract's maximum term has been extended from 5.5 years to 11 years to better assist foreign investors in managing interest rate risks [7]. Group 3: Operational Performance - Since its launch on May 15, 2023, the "Swap Connect" has been operating smoothly, becoming an important channel for foreign institutional investors to manage RMB interest rate risks [7]. - As of August 2025, 82 foreign financial institutions from 15 countries and regions have conducted over 15,000 RMB interest rate swap transactions, totaling approximately RMB 8.15 trillion in nominal principal [7].

Core Viewpoint - Hong Kong Exchanges and Clearing Limited (HKEX) has introduced a new interest rate swap contract based on the one-year Loan Prime Rate (LPR1Y) under the "Northbound Swap Connect" to meet the diverse needs of overseas investors [1][2][3] Group 1: New Financial Instruments - The introduction of LPR1Y-based interest rate swaps aims to enhance the risk management tools available to overseas investors, addressing previous concerns about the lack of liquidity and risk management options in Chinese government bonds [2][3] - On the launch day, 31 domestic and foreign institutions participated, executing 53 trades with a total nominal principal amount of RMB 6.46 billion [2] Group 2: Operational Stability - Since its launch on May 15, 2023, the "Swap Connect" has been operating smoothly, becoming an important channel for overseas institutions to manage RMB interest rate risks [4] - As of August 2025, 82 overseas financial institutions from 15 countries and regions have conducted over 15,000 RMB interest rate swap transactions, totaling approximately RMB 8.15 trillion in nominal principal [4] Group 3: Future Developments - HKEX plans to continue collaborating with regulatory bodies and market participants to enrich the "Swap Connect" product offerings and improve the risk management framework [4] - The maximum term for the existing CNY Non-Deliverable Interest Rate Swap (CNY NDIRS) contracts has been extended from 5.5 years to 11 years to better assist overseas investors in managing interest rate risks [4]