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Hong Kong CEO John Lee hailed the Swap Connect program as a

Hong Kong CEO John Lee hailed the Swap Connect program as a ‘milestone’ in the city’s financial integration with mainland China © AFP via Getty Images

The launch of Hong Kong’s Swap Connect program, which gives global investors easy access to China’s $5 trillion swap market, is being delayed, according to those familiar with the situation, as regulators in Beijing fail to enforce the rules. necessary for the operation of the trading system.

Swap Connect, announced during Chinese President Xi Jinping’s high-profile visit to the city in July, has been positioned by officials as an important new conduit for further opening up China’s vast onshore markets.

The move was also celebrated as a boon for Hong Kong, where Covid-19 restrictions have stifled the economy and undermined the competitiveness of the financial sector.

However, the program likely won’t meet its target launch window of early January, two people familiar with the matter said, as Beijing regulators have yet to publish basic information on the final rules for the program nearly five months after the unveiling.

“There is a lot of interest from financial institutions, but nobody has seen details,” said the head of a trade association in Hong Kong, adding that regulators in the city and mainland China should answer some pressing questions. before rules could be published.

“This brings complex jurisdictional and legal issues,” said the industry head. “It’s not just about the execution of transactions. I don’t see how that can be achieved in early January.”

Swap Connect is in the same format as Hong Kong’s successful Stock Connect and Bond Connect programs, which gave offshore investors access to China’s onshore debt and equity markets in Shanghai and Shenzhen.

Learn more about the Swap Connect delay here.

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