Hong Kong Exchange and Clearing's (0388) derivatives clearing houses began accepting eligible yuan fixed-income holdings as non-cash margin collateral on Monday, seeing seven institutions post over 400 million yuan (HK$472 million) of such bonds on day one.
The initiative enables participants to pledge Chinese government and policy bank bonds via Northbound Bond Connect, alongside offshore bonds issued by the Ministry of Finance of the People's Republic of China (MOF Bonds), for margin requirements, avoiding asset sales or cash conversion. The move widens collateral choices and improves liquidity and funding efficiency across HKEX markets, HKEX said.
Seven participating institutions include Bank of China (Hong Kong) (2388), CICC Financial Products, CITIC Securities International Capital Management and The Hongkong and Shanghai Banking Corporation, among others.
Gregory Yu, HKEX's head of Markets, said the company is encouraged by the active first-day participation in the expanded collateral framework. It marks another important milestone in strengthening cross-market connectivity, and in Hong Kong’s continued development as a global offshore yuan center.
HKFE Clearing Corporation (HKCC) and SEHK Options Clearing House (SEOCH) are the first listed derivatives clearing houses outside the Chinese Mainland to accept China Government Bonds as collateral.
"Together with CMU OmniClear, we are connecting Mainland bond holdings with Hong Kong's derivatives clearing infrastructure, facilitating the wider use of yuan-denominated assets and supporting the continued internationalization of the yuan," he added.
The initiative builds on HKEX's existing yuan bond collateral arrangements, under which OTC Clear began accepting MOF Bonds and Bond Connect Securities as collateral in 2017 and 2025, respectively. Use of these bonds represent about 16 percent of OTC Clear’s total margin balance as of September 2026, HKEX added.
Frank Feng
