UBS London and HSBC, Hong Kong branch, have selected Euroclear Bank and the Hong Kong Monetary Authority (HKMA) as collateral management agents, to carry out their first renminbi (RMB) tri-party repo.
The tie up between HKMA and Euroclear Bank has ensured transfer of securities as collateral from UBS London’s account in Euroclear Bank to the HSBC Hong Kong branch’s account in HKMA to support the RMB repo.
HSBC Asia Pacific global markets deputy head and Hong Kong Trading head Justin Chan said the bank expects that by the end of 2015, the level of RMB deposits in the region will grow to a total of 30% from current 9% of all Hong Kong deposits.
UBS APAC Repo Trading emerging market executive director Bernard Chin said, "It is operationally efficient and further integrates collateralised lending and borrowing between the domestic market in Hong Kong and the international market."
RMB cross-border settlement increased four times from RMB50bn in August 2010 to almost RMB200bn ($31.8bn) in October 2012, according to a HKMA reports.
Euroclear Bank caters settlement and related services for overseas transactions relating to domestic and international bonds, equities, derivatives and investment funds.