Published On: Thu, Sep 8th, 2011

Hong Kong’s Regulatory Platform Ready to Support New RMB Initiatives

Hong Kong securities regulator stands ready to facilitate the implementation of Mainland policy initiatives aimed at accelerating the pace of transforming renminbi (RMB) into an internationally accepted and widely used currency.

Speaking September 7 at an off-shore RMB market conference, the Securities and Futures Commission’s (SFC) Acting Chief Executive Officer, Mrs Alexa Lam believes that the RMB bond market will take off “in an impressive fashion” when the new Foreign Direct Investment measures are in place permitting RMB raised or borrowed in Hong Kong to flow into the Mainland for direct investment.

“With more RMB bond issuances, there will be a wider secondary trading and related activities. A deeper and more liquid RMB bond market would lead to more bond funds and other RMB products,” said Mrs Lam.

This would in turn create a deeper pool of RMB assets essential for achieving the goal of further liberalization of RMB, she said.

Mrs Lam said Hong Kong’s regulatory platform is ready to authorize retail fund products managed by holders of Renminbi Qualified Foreign Institutional Investors (RQFII) quotas, adding the RMB 20 billion RQFII quota is “an encouraging start.”

She also thinks Hong Kong has a crucial role to play in the process of RMB liberalization which requires international participation and support.

“The players must include not just Mainland firms but also Hong Kong and international entities which bring to the table the best of international experience, global liquidity and world standards. It is Hong Kong’s role to connect all these players, and give each of them an open opportunity to excel,” Mrs Lam said.

She called on all participants to leverage on their skills and experience to capture the business opportunities and contribute towards Hong Kong’s development into the world’s premier offshore RMB centre.

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