In a meeting with reporters, Eddie Yue, Chief Executive at Hong Kong Monetary Authority (HKMA), said that an RMB trade finance liquidity arrangement will be launched, with one-month, three-month and six-month tenors, totaling RMB100 billion, and the interest rate will be increased by a specific percentage point with reference to the CNY interest rate. The measure is expected to be implemented on or before the end of next month.

Regarding the enhancement measures of the Bond Connect, Yue pointed out that the settlement time of the Southbound Bond Connect will be extended from 3:30 pm to 4:30 pm, and Mainland China investors can only buy RMB and HKD bonds at present, which will be extended to multiple currencies, including USD and EUR. Both measures will be implemented starting from tomorrow.

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In addition, starting from 2 February, foreign investors will be allowed to use CNY bonds as collateral for CNH repurchase business in Hong Kong, he said. It is expected that the use of CNY bonds as collateral for all derivative financial products under the umbrella of the over-the-counter (OTC) clearing houses will be finalized within this quarter.

A preliminary consensus had been reached with the People's Bank of China (PBOC) on expanding the scope of the Southbound Bond Connect for eligible institutional investors, and studying the possibility of allowing non-banking institutions to participate, he mentioned. Details will be announced in due course after the mainland regulators have completed the approval process.