HKD-RMB Dual Counter Model is prepared
HKMA and SFC welcomes the launch of the HKD-RMB Dual Counter Model and the Dual Counter Market Making Programme.
The HKMA has been working closely with the Securities and Futures Commission (SFC) and Hong Kong Exchanges and Clearing Limited (HKEX) to promote the issuance and trading of RMB-denominated securities in Hong Kong. The SFC and HKEX have recently issued the relevant implementation details, providing guidance for the industry on participating in the Dual Counter Model.
Published by SFC, the revised guidance on short selling reporting and stock lending record keeping to prepare for the launch of the HKD-RMB Dual Counter Model in the Hong Kong securities market on 19 June 2023.
The Guidance Note on Short Selling Reporting and Stock Lending Record Keeping Requirements has been updated to cover inter-counter transactions of securities under the Dual Counter Model. Corresponding revisions have also been made to the SFC's Frequently Asked Questions for Short Position Reporting.
The Guidance Note clarifies that as HKD and RMB counters for the same security are of the same class, the following inter-counter transactions fall within the current framework:
(1) when an investor buys a security at one counter first and sells at another, the sale is considered an ordinary sale, and
(2) when a Dual Counter Model market maker sells a security at one counter and buys it at another, the inter-counter transaction falls under the current exemption, subject to certain conditions.
“The SFC supports dual counter trading, which will help promote the renminbi’s internationalisation and use as an investment currency,” said Ms Julia Leung, the SFC's Chief Executive Officer. “An effective and efficient mechanism provided for market makers will help promote liquidity and minimise price differences between the two counters.”
Mr Eddie Yue, Chief Executive of the HKMA, said, “The launch of the HKD-RMB Dual Counter Model and the Dual Counter Market Making Programme is a significant step towards developing a diversified range of RMB-denominated products in Hong Kong. The initiatives will facilitate the use of the RMB in equity trading in Hong Kong and further expand the RMB investable universe, thereby reinforcing Hong Kong’s role as the leading offshore RMB business hub.”
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