HKEX launches one-year LPR swaps with $7 billion debut trades

A total of 53 one-year loan prime rate interest rate swap transactions worth 6.46 billion yuan (HK$7.06 billion) were executed on Monday, the first day the contracts became available under Northbound Swap Connect, Hong Kong Exchanges and Clearing (0388) said. 

The addition of LPR, a key benchmark for business loans in China, expands the program’s floating reference rate options and gives global investors new tools to manage yuan-denominated interest rate risk, HKEX said in a statement. 

It also enhanced Hong Kong’s competitiveness as an international financial center and supported the internationalization of the yuan, the bourse operator said. 

Launched in May 2023, Swap Connect links Hong Kong and mainland China’s interbank swap markets and has grown into a primary channel for international investors to manage the interest rate risk of their assets denominated in the yuan, it said.

By the end of August, 82 overseas institutions from 15 markets had conducted more than 15,000 transactions with an aggregate notional value of 8.15 trillion yuan under the scheme. 

Separately, HKEX’s clearing subsidiary, OTC Clearing Hong Kong, extended the maximum tenor for clearing non-deliverable yuan swaps to 11 years from 5.5 years, offering investors more flexibility.