Nearly 20 blue chip firms have so far submitted applications to use the yuan trading counter which is expected to be launched by the end of June, according to Hong Kong Exchanges and Clearing (0388).
The counter on the Stock Connect will be rolled out in phases, with a focus on securing the participation of large companies initially before extending it to other investors, chief executive Nicolas Aguzin said.
In the initial stage, only market makers will participate in HKD-RMB dual counter which will provide quotes in both RMB and HKD, he told local media.
However, southbound trading will still need to be conducted through the existing process of exchanging RMB to HKD.
Aguzin said that the opening of the yuan counter for southbound trading may take longer than expected due to the extended period required for system implementation and other preparatory work. Currently, there is no definite timetable for its introduction.
He said the counter will be a "game changer" for southbound trading. Currently, investors trading Hong Kong stocks via the Stock Connect exchange yuan for the local currency, with the exchange rate not confirmed until the following day.
The implementation of the new system is expected to reduce exchange costs and rate risks for investors, and as a result, is anticipated to stimulate trading volume.
Aguzin noted that once the yuan counter for southbound transactions is introduced, it is expected that "vast majority" of transactions will be denominated in yuan.
