Northbound trading of the Swap Connect will kick off on May 15, which will facilitate access of overseas investors to onshore interest rate swaps, the People's Bank of China, the country's central bank, said on Friday.
Starting May 15, overseas investors in the country's interbank bond market who have applied for trading access with the China Foreign Exchange Trade System will be eligible to trade via the northbound connect.
The northbound connect will be subject to a daily net trading quota of 20 billion yuan ($2.89 billion) and a clearing quota of 4 billion yuan, the central bank said, adding it will adjust the quotas based on the market. Xu Zhaoting, head of renminbi trading for global emerging markets at Deutsche Bank, said the launch of northbound trading will mark a significant step for China to open up its financial derivatives market, providing a key channel for overseas investors to hedge against interest rate risks.
Deutsche Bank, Xu added, has received inquiries from a lot of investors keen to participate at the earliest opportunity.
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