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Treasury & Capital Markets
BOCHK launches market-making mechanism for PBOC bills
Repo and reverse repo deals to promote RMB internationalization
The Asset 27 Jan 2021

Bank of China (Hong Kong) has launched a market-making mechanism to further increase trading activity and expand the use of People’s Bank of China (PBOC) bills in the secondary market in the territory.

In a statement, BOCHK says that as a leading bank in the offshore renminbi business, it has established the Hong Kong PBOC Bills Repo Business Market-making Mechanism with its own RMB funding. The bank will offer overseas investors with repo and reverse repo services for PBOC bills at market prices.

Since 2020, the PBOC has been issuing renminbi bills on a scheduled and market-based basis in the offshore RMB market in Hong Kong, providing overseas investors with a stable and high-quality investment channel.

Each issuance of PBOC bills has attracted supernationals, central banks, commercial banks as well as fund managers, making a significant contribution to the internationalization of the renminbi.

Investors can use PBOC bills issued in Hong Kong as collaterals for repo or reverse repo transactions at market prices provided by BOCHK. Available tenors will be overnight, one week, two weeks, one month, two months and three months, while transactions will be settled on T+0, T+1 or T+2.

A series of PBOC bills have been issued to institutional investors by tender in the Hong Kong market since the “Memorandum of Cooperation on Using Central Moneymarkets Unit for Issuance of PBOC Bills” was signed by the PBOC and the Hong Kong Monetary Authority on September 20 2018.

This has formed a regular market-based issuance mechanism and established a complete yield curve for PBOC bills.

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