HKMA Grants Citi, BNP Paribas and Five Other Banks RMB Liquidity Provider Status

The Hong Kong Monetary Authority (HKMA) has designated seven banks, including Citibank and BNP Paribas, as primary liquidity providers (PLP) for the offshore renminbi (RMB) market in Hong Kong (CNH).

The announcement comes as foreign investors eagerly await the launch of the Shanghai and Hong Kong Stock Connect that will internationalize the Chinese domestic securities market.

Other banks granted this status include Bank of China (Hong Kong), China Construction Bank (Asia), HSBC, Industrial and Commercial Bank of Chain (Asia), and Standard Chartered Bank (Hong Kong).

The banks will provide market making activities in Hong Kong for various CNH instruments and will use the Hong Kong platform in promoting their global offshore renminbi instruments. In return, the HKMA will provide the banks access to its RMB 2 billion repo facility.

“The PLPs will help make the CNH products in Hong Kong more liquid and make more use of Hong Kong to support their CNH business worldwide,” says Norman Chan, chief executive, HKMA.

“Under the leadership of the HKMA, Hong Kong has successfully become a global offshore RMB business hub and plays a pivotal role in the new era of China’s growth story,” adds Paul Yang, head of greater China and CEO of BNP Paribas Hong Kong branch.

In addition, the HKMA announced it will expand its existing RMB liquidity facility will to include intraday repos, taking effect on November 10. This will allow authorized banks to initiate a repo transaction with the HKMA to obtain intraday RMB funds.

The existing list of securities eligible for the facility will also be expanded to include RMB bonds issued by China’s policy banks in Hong Kong.

“This would provide banks with greater flexibility in managing their payment flows upon the launch of the Shanghai-Hong Kong Stock Connect in the future,” the HKMA states.