BNP Paribas Securities Services has launched clearing and settlement for Renminbi-denominated bonds in Hong Kong. Clearstream and Euroclear have launched similar services since the Peoples Bank of China and Chinese regulators announced an expansion of the Renminbi (RMB) trade settlement scheme in July 2010
BNP Paribas settled its first trade on 22 September.
Previously, foreign investors could only settle in Hong Kong dollars if the security was listed on the Shenzhen Stock Exchange, or U.S. dollars if listed on the Shanghai Stock Exchange. Since 2004, the Peoples Bank of China has allowed Hong Kong investors to purchase or sell RMB, enforcing a limit of only RMB20,000 per day.
On July 2010, regulators allowed interbank transfers of RMB deposits in Hong Kong, amd all limits on the buying and selling of RMB were lifted.
Interest in RMB among financial institutions and cooperates has been growing in recent months. Swedbank and Northern Trust have recently won banking licences in Shanghai and Beijing respectively. According to the Hong Kong Monetary Authority, settlement volumes rose to a monthly average of just over $1 billion since February 2010. McDonalds, the fast-food giant, recently became the first corporate to issue a RMB -denominated bond. The bond issuance, managed by Standard Chartered, sold in less than two hours, according to Sundeep Bhandari, Standard Chartereds regional head of global markets.
This arrangement between Hong Kong and China will basically enable anybody to gain exposure to the Chinese Renminbi via Hong Kong – from anywhere in the world,” says Lawrence Au, head of Asia Pacific, BNP Paribas Securities Services.
Norman Chan, chief executive of the HKMA, said, “The expansion of the Renminbi trade settlement is bringing the development of Hong Kongs Renminbi business to a new stage. With our established Renminbi financial infrastructure and clearing arrangement, Hong Kong is well-positioned to serve the greater scope of Renminbi financial intermediation activities. We look forward to working with the financial community in capturing the opportunities to the fullest extent.”