Linklaters advises Hong Kong Exchanges and Clearing Limited on the establishment of the Swap Connect programme
Linklaters advised Hong Kong Exchanges and Clearing Limited (HKEX) on the design, drafting of documentation for, and the regulatory and legal issues on the establishment of Swap Connect, which was launched today.
Swap Connect is a new mutual market access programme between mainland China and Hong Kong SAR for the trading of over-the-counter (OTC) derivatives. It enables foreign investors to trade interest rate swap products through financial market infrastructures such as China Foreign Exchange Trade System (CFETS) and the Shanghai Clearing House (SHCH) in mainland China, and OTC Clearing Hong Kong Limited (OTC Clear) in Hong Kong. It will start with northbound trading in the initial phase, allowing global investors easy access to mainland China’s RMB interest rate swap market through arrangements in trading, clearing and settlement between approved institutions in Hong Kong SAR and mainland China.
The successful launch of Swap Connect marks another major milestone in the integration of the financial markets between Hong Kong SAR and mainland China, further strengthening Hong Kong SAR’s status as a global offshore RMB business hub and risk management centre.
The Linklaters team was led by Asia Head of Structured Finance and Derivatives Chin-Chong Liew, with support from structured finance and derivatives partner Karen Lam, counsel Simon Zhang managing associate Shirley Chan and associate Kelvin Law. Zhao Sheng Law Firm provided PRC law support to HKEX in relation to this project – consolidating Linklaters’ long-standing reputation for providing seamlessly integrated Chinese and international legal advice to clients through its joint operation in China. Key members of the Zhao Sheng team included counsel Ying Zhou and associate Yvette Bao.
Partner Chin-Chong Liew, commented:
“The Swap Connect marks another step towards the wider integration and development of the financial markets between Hong Kong SAR and mainland China. We are delighted to have advised HKEX on such a significant development and thank them for their continued trust in our team. With our deep understanding from advising on the establishment of all the “connect” schemes since their inception in 2014, we are confident that the robust Swap Connect programme will attract substantial global investments into mainland China’s vast onshore markets.”
Linklaters Zhao Sheng has played a leading role in advising HKEX on the establishment of each of Shanghai/Shenzhen-Hong Kong Stock Connect, Bond Connect, and more recently ETF Connect – leading innovative investment schemes deepening the connectivity between mainland China and international markets.
