HKEX unveils new clearing service

Business | Stella Zhai 10 Jul 2020

Hong Kong Exchanges and Clearing's (0388) central counterparty subsidiary, OTC Clearing Hong Kong, has become the first clearinghouse to offer clearing services for Hong Kong Dollar Interest Rate Swap contracts benchmarked to the Hong Kong Dollar Overnight Index Average reference rate, the alternative reference rate to the Hong Kong Interbank Offered Rate.

This first centrally cleared HONIA IRS contract was between Bank of China (Hong Kong) (2388) and The Hongkong and Shanghai Banking Corporation, said HKEX.

With the key US dollar interest rate benchmark, the London Interbank Offered Rates, set to be decommissioned after end-2021, regulators have been working to adopt new interest rate benchmarks. HKEX said OTC Clear has introduced clearing services for swaps linked to the euro short-term rate and the secured overnight financing rate to help facilitate clearing members in their transition to alternative reference rates.

The company has also launched the Master Special Segregated Account (Master SPSA) service to support the Stock Connect.

The new optional service will facilitate more efficient pretrade checking of northbound sell orders and average pricing execution at the fund manager level, according to HKEX.

"As a service enhancement to support Stock Connect, Master SPSA aims to address market demand for more efficient pretrading checking and provide added benefit and convenience for institutional investors and market participants," said HKEX's head of markets Wilfred Yiu.

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