Published On: Tue, Nov 26th, 2013

HK OTC Clear Has Smooth Soft Launch

Charles Li CEO HKEx

Charles Li CEO HKEx

OTC Clearing Hong Kong Limited (OTC Clear), a subsidiary of Hong Kong Exchanges and Clearing Limited (HKEx) established to provide clearing services for over-the-counter (OTC) derivatives, announces that its soft launch of business was completed smoothly 25 November.

“Today’s soft launch of OTC Clear was a success and we look forward to the gradual development of its business in size and product range,” said HKEx Chief Executive Charles Li. “OTC Clear is a key part of our strategy to develop our fixed income and currency business, leveraging on the accelerating internationalisation of Renminbi (RMB) and Hong Kong’s position as the premier offshore RMB centre.”

OTC Clear’s clearing members currently comprise Bank of China (Hong Kong) Limited, The Hongkong and Shanghai Banking Corporation Limited and Industrial and Commercial Bank of China (Asia) Limited, three of its 12 founding shareholders. It is expected that the other founding shareholders or their affiliates will join as clearing members in due course. OTC Clear is also working with other financial institutions in Hong Kong on membership admission arrangements.

OTC Clear is now offering clearing services for inter-dealer interest rate swaps denominated in four currencies: RMB, Hong Kong Dollars (HKD), US Dollars (USD) and Euros. It is also offering clearing services for inter-dealer non-deliverable forwards referencing RMB, Taiwan Dollars, Korean Won and the Indian Rupee. It plans to introduce client clearing in 2014 after the new legislation on the Securities and Futures (Amendment) Bill is in place and relevant amendments to OTC Clear rules are approved by the Securities and Futures Commission, and will expand its clearing services to cover other OTC derivatives when appropriate.

OTC Clear’s first cleared trade was a non-deliverable RMB 7-day repo swap between Bank of China (Hong Kong) Limited and The Hongkong and Shanghai Banking Corporation Limited, the first of its kind processed by a clearing house globally. Other cleared transactions today included a USD / RMB non-deliverable foreign exchange forward deal and a HKD interest rate swap. The total notional value (HKD equivalent) of the transactions processed today by OTC Clear was about $304 million.

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