HK explores central counterparty clearing introduction for bond repurchase in phases: SFC

Hong Kong is studying the introduction of central counterparty clearing for bond repurchase in phases, as well as the establishment of a dedicated settlement system, said Rico Leung Chung-yin, Executive Director of the Supervision of Markets at the Securities and Futures Commission.

The move will effectively lower settlement and systemic risks, Leung said at the HKEX China Conference 2026 on Wednesday, as the city seeks to strengthen secondary market liquidity, with the development of the bond repurchase market being the key.

The city will also push for the regular issuance of government bonds and promote them to the mainland, Southeast Asia and the Middle East markets, he said, citing the proposed issuance of 84 billion yuan (HK$98.2 billion) sovereign bonds by the Ministry of Finance of the People's Republic of China in Hong Kong this year, up 24 percent from a year ago.

Besides, there is still room to raise the proportion of non-cash collateral accepted as margin, Leung noted.

This came as Hong Kong Exchanges and Clearing's (0388) OTC Clearing Hong Kong has accepted Chinese government bonds and policy bank bonds via Bond Connect as eligible non-cash collateral to fulfill margin requirements since last year.

As of the end of August, these Bond Connect securities deposited by overseas investors have accounted for 19 percent of the total margin collateral, which not only activates capital but also expands the use of Chinese bonds, he added.

This kind of collateral will be accepted by the HKFE Clearing Corporation and the SEHK Options Clearing House at the end of this year, further improving the global appeal of the yuan assets, he said.

Meanwhile, HKEX will consider further lowering the annual accommodation charge for non-cash collateral under the new collateral arrangement after the fee was reduced to 0.25 percent from 0.5 percent, he added.

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