OTC Clear Completes 1st Trades for Japanese Banks via Client Clearing

  • Trades reflect increased client demand for CCS clearing services through HKEX
  • Strong growth in CCS clearing volumes for first nine months to 30 September 2020, up 17 per cent to US$62 billion


Hong Kong Exchanges and Clearing Limited (HKEX) is pleased to announce that its central counterparty (CCP) subsidiary, OTC Clearing Hong Kong Limited (OTC Clear), has successfully completed its first client clearing trades for Japanese financial institutions, further expanding the reach of HKEX’s fixed-income and currency product offering in the region and internationally.

OTC Clear cleared a US Dollar-Offshore Renminbi Cross Currency Swap (USDCNH CCS) trade by Mizuho Bank and a US Dollar-Hong Kong Dollar (USDHKD CCS) trade by MUFG Bank, with the Hongkong & Shanghai Banking Corporation acting as the clearing broker for both trades. The latest trades underscore the growing client demand for cross currency swaps (CCS), supporting the healthy expansion of OTC Clear’s liquidity pool for CCS.

Calvin Tai, Co-President and Chief Operating Officer, HKEX, said: “The trades mark a major milestone for OTC Clear on our way to being recognised as a major clearing house for cross currency swaps. This is an important development in our continued expansion of our product and service offering, strengthening Hong Kong’s relevance as a leading international financial centre.”

Justin Chan, Head of Greater China, Asia Pacific, Global Markets, HSBC, said: “HSBC strives to partner with the industry to drive capital market developments in Hong Kong on all fronts. We are pleased to support the first client cleared cross-currency swap trade, marking a key progress of the derivatives market in Asia Pacific. It also showcases Hong Kong’s innovation capability in meeting evolving client demand for offshore RMB derivatives products.”

Yuichiro Harada, Managing Director, Head of East Asia Treasury Department, Mizuho Bank, said: “It is a significant step that Mizuho bank, Ltd starts to clear cross currency swaps as the first Japanese financial institution. We appreciate all the support we have received from all concerned. We will keep contributing to the development of local currency derivatives business in Hong Kong as one of the major market players.”

Akira Kato, Managing Director, Head of Global Markets Division for Asia, MUFG Bank, said: “As one of the first Japanese banks to be appointed Indirect Clearing Member of OTC Clear, MUFG is pleased to have successfully collaborated with OTC Clear on a USDHKD cross currency swap. With the rapid growth of business activity in the Greater China region, the ability to efficiently clear OTC derivatives is becoming increasingly important, and MUFG’s partnership with OTC Clear will greatly enhance our service offering to global clients keen on capturing growth opportunities in this dynamic region.”

In January 2020, OTC Clear was licensed by the Financial Services Agency of Japan (JFSA) as a Foreign Financial Instruments Clearing Organisation, which facilitated Japanese financial institutions clearing CCS via HKEX’s OTC Clear.

Apart from Japan, OTC Clear is also recognised by authorities in the US, European Union, and Australia, providing clearing services to their financial institutions.

OTC Clear was set up in 2013 to provide OTC derivatives central clearing services. OTC Clear recorded strong performance for the first three quarters of 2020, with total clearing volumes reaching US$120 billion, and a 17 per cent growth in CCS clearing volumes for the same period to US$62 billion.



About HKEX

Hong Kong Exchanges and Clearing Limited (HKEX) is one of the world’s major exchange groups, and operates a range of equity, commodity, fixed income and currency markets.  HKEX is the world’s leading IPO market and as Hong Kong’s only securities and derivatives exchange and sole operator of its clearing houses, it is uniquely placed to offer regional and international investors access to Asia’s most vibrant markets.

HKEX is also the global leader in metals trading, through its wholly owned subsidiaries, The London Metal Exchange (LME) and LME Clear Limited.  This commodity franchise was further enhanced with the launch of Qianhai Mercantile Exchange (QME), in China, in 2018.

HKEX launched the pioneering Shanghai-Hong Kong Stock Connect programme in 2014, further expanded with the launch of Shenzhen Connect in 2016, and the launch of Bond Connect in 2017.