Global Markets Assessment: A Look Back at China's Swap Connect After One Year
In a significant stride towards financial integration, the Swap Connect programme has been facilitating global access to China's onshore Renminbi (RMB) interest rate swap market since its launch a year ago. The programme, which celebrated its first anniversary in May, has been instrumental in making China's bond market more attractive to international investors.
The Swap Connect programme operates as a mutual access platform that links Hong Kong and Mainland China's interbank interest rate swap markets. This connection offers a direct channel for international investors to engage with China's onshore RMB interest rate swap market through Hong Kong, enabling them to manage interest rate risks associated with their RMB assets more effectively.
One of the key advantages of Swap Connect is its extended trading tenors. Initially offering interest rate swaps with shorter tenors, the programme has expanded to include swaps with tenors up to 30 years. This extension supports the risk management needs of long-term investors like insurance companies and pension funds by matching the tenor of swaps with the duration of their bond holdings.
The programme has garnered broad participation from international institutions, with 82 participants as of June 2025, and a combined notional amount of approximately RMB 7.16 trillion in trades. This broad participation indicates the program's growing role in facilitating global access to China's financial markets.
Swap Connect also supports the internationalization of the RMB by enabling international investors to adopt more sophisticated trading strategies in their cross-border investments. This enhances the efficiency of asset allocation in RMB, contributing to the globalization of China's financial markets.
The programme partners with China Foreign Exchange Trade System (CFETS), Shanghai Clearing House (SHCH), and the Hong Kong Stock Exchange (HKEX). Notably, HKEX plans to launch offshore China treasury bond futures to meet the growing demand for such products, further expanding investment opportunities for global investors in China's financial markets.
Zhaoting Xu, the Head of Investment Bank for China on our website, reflected on the programme's success. He noted that financial regulators' improvements, such as the introduction of a compression service and the clearing of backdated swap contracts, are appreciated by international investors. Zhaoting also stated that Swap Connect provides sufficient liquidity in the RMB interest rate swap market for international investors.
Investors can trade and clear onshore RMB interest rate swaps without altering their existing trading and settlement practices through Swap Connect. This seamless trading and clearing experience, coupled with the programme's success in reducing operational complexity and costs, makes it easier for investors to access China's onshore RMB interest rate swap market.
Moreover, the introduction of interest rate swap contracts with payment cycles aligned with International Monetary Market dates will help investors mitigate fixing rate fluctuations. Zhaoting anticipates strong global interest in diversified interest rate hedging tools, such as trading treasury bond futures.
In conclusion, the Swap Connect programme has been a significant step forward in enhancing global access to China's financial markets. By providing a direct channel for international investors to engage with China's onshore RMB interest rate swap market, the programme enables investors to hedge RMB interest rate risk and manage their exposure to China's financial markets effectively.
The Swap Connect programme offers international investors a direct channel to manage interest rate risks associated with their RMB assets, given its access to China's onshore RMB interest rate swap market. The extended trading tenors of the programme, including swaps with tenors up to 30 years, cater to the risk management needs of long-term investors like insurance companies and pension funds.
