HKEX launches market making programme for new HKD-RMB Dual Counter Model

Rick Steves

“The launch of the Dual Counter initiative is the latest in our broad suite of RMB products, providing investors with more choice and companies with another channel to tap the Hong Kong offshore RMB pool.”

Hong Kong Exchanges and Clearing Limited (HKEX) has launched its new Hong Kong Dollar (HKD)-Renminbi (RMB) Dual Counter Model (Model) and the Dual Counter Market Making Programme in its securities market.

The offering will include a total of 24 Hong Kong-listed companies, accounting for 40 percent of the average daily turnover of the cash equities market, which will trade and transact as Dual Counter securities at launch, offering both HKD and RMB counters. Nine market makers have joined the HKEX programme to serve as counterparties on the dual counter model.

The launch of the market making programme aims to support liquidity of RMB Counters and minimize discrepancies between the two counters.

Another channel to tap the Hong Kong offshore RMB pool

Under the Hong Kong Dollar (HKD)-Renminbi (RMB) Dual Counter Model, designated shares listed in both HKD and RMB counters can be traded and settled in RMB or HKD.

Dual Counter Market Makers for eligible shares offer continuous buy and sell quotes for securities in the RMB counter, providing liquidity for HKD-RMB Dual Counter securities trading and minimising any possible price discrepancies between the two counters.

The model provides the groundwork to support the next phase of development to allow investors from Mainland China to trade Hong Kong-listed RMB securities through Southbound Stock Connect.

Nicolas Aguzin, Chief Executive Officer at HKEX, said: “The ongoing internationalization of the RMB will be one of the defining characteristics of global markets in the next decade, and at HKEX we are delighted to today be taking another step forward in building a liquid and accessible RMB ecosystem. The launch of the Dual Counter initiative is the latest in our broad suite of RMB products, providing investors with more choice and companies with another channel to tap the Hong Kong offshore RMB pool.”

“Today’s launch is the culmination of many months of hard work and we’d like to thank all our market participants, our regulators and those involved whose partnership and collaboration have helped to continue to reinforce Hong Kong’s role as the preeminent global offshore RMB hub.”

In March, HKEX submitted an application to launch a Renminbi (RMB) counter for trading of HKEX shares as part of the HKD-RMB Dual Counter Model. The exchange operator signaled its intentions of launching RMB counter trading under the HKD-RMB Dual Counter Model in order to allow investors to seamlessly interchange between securities listed in both HKD and RMB, offering a choice of trading currency and the potential to access new liquidity.

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