Leung Fung-yee, the Chief Executive of the Hong Kong Securities and Futures Commission, stated that the global macroeconomic landscape is undergoing profound changes, with increasing market demand for diversified asset allocation and renminbi assets. She believes the current moment presents a favorable opportunity for Hong Kong to advance its roadmap for developing the Fixed Income and Currency (FIC) market.

Three measures under this roadmap are critical for propelling the FIC market forward: trading platforms, fixed income collateral, and risk management.

Leung noted that renminbi assets are gradually becoming an effective option within non-US dollar asset allocations. As of the end of April 2026, overseas investors held over 3 trillion yuan in onshore renminbi-denominated bonds. Concurrently, northbound Bond Connect trading has also seen steady growth, with monthly turnover reaching a record high of 1.2 trillion yuan and average daily turnover hitting a new peak of 556 billion yuan.

Regarding FIC trading platforms, she mentioned that the People's Bank of China recently announced that the China Foreign Exchange Trade System (CFETS) will collaborate with Hong Kong Exchanges and Clearing Ltd (HKEX; SEHK: 0388) to develop a new electronic FIC trading platform. This new platform will not replace existing ones but will provide the market with a fresh alternative. This initiative aims to strengthen Hong Kong's role as a bridge connecting onshore and offshore markets, particularly by offering more differentiated services for trading, liquidity management, and risk management of offshore renminbi fixed income products.

To enhance secondary market liquidity, she pointed out the need to further develop Hong Kong's repo market and introduce repo clearing through central counterparties. These elements will form part of a robust and resilient FIC ecosystem.

The second key measure involves expanding the range of eligible fixed income instruments accepted as collateral by clearing houses. Specifically, the People's Bank of China has permitted onshore Chinese government bonds and policy financial bonds held by overseas investors via Bond Connect to be used as performance collateral for the Hong Kong Futures Exchange Limited and The Stock Exchange of Hong Kong Options Clearing House Limited.

Leung indicated that this new measure will further enhance the appeal of renminbi assets by increasing their utility. Since the start of 2025, when Chinese government bonds held under Bond Connect were permitted for use as margin collateral for all instrument trades at OTC Clearing Hong Kong Limited (OTC Clear), overseas investors had submitted a total of 3.9 billion yuan in onshore government bonds as margin collateral by early June 2026, accounting for approximately 17% of all margin collateral held by OTC Clear.

Leung also mentioned that the SFC has been working closely with HKEx to facilitate cross-collateral arrangements and is actively studying the feasibility of implementing cross-market margin arrangements among various clearing houses under HKEx. This move could significantly improve capital efficiency without increasing exposure risk to HKEx.

On the topic of FIC risk management, she noted that the People's Bank of China stated it would optimize Swap Connect. The SFC is currently in discussions with the PBOC to add the 7-day deposit institution repo fixing rate (FDR007) from the interbank market as one of the reference rates for Swap Connect. Leung views this as another step towards introducing more hedging tools for market participants, aiding them in better managing interest rate risk for renminbi-denominated positions. She anticipates that clearing houses from both sides will jointly launch the relevant new contracts in the fourth quarter of this year.

Regarding the five-year offshore renminbi government bond futures contract, she stated that HKEx will officially launch it on August 3, 2026, as a transparent and standardized hedging tool. Furthermore, the SFC will continue to support HKEx in launching more futures products, including renminbi versus other currency forex futures and renminbi-denominated gold futures.