China News Service, Hong Kong, September 28. Yu Weiwen, President of the Hong Kong Monetary Authority (HKMA), wrote on the 28th that the HKMA will study with the mainland to expand the range of Bond Connect transactions to repurchase and other derivative instruments, such as interest rate swaps. Will continue to optimize the current foreign exchange hedging arrangements.

　　Yu Weiwen said that the mainland bond market still has great potential for opening to the outside world, and the influx of international funds is just around the corner.

At the same time, there is still room for improvement in the mechanism and supporting facilities for international investors to participate in the mainland bond market.

Therefore, the optimization of Bond Connect is a constant work.

　　Yu Weiwen believes that as the proportion of mainland bonds in the investment portfolio of international investors increases, the need to manage foreign exchange, interest rate and liquidity risks is also increasing, and providing more diversified risk management tools is one of the first tasks.

　　He pointed out that the number of investment institutions participating in Bond Connect has increased from zero in three years to the current 578, covering large and small financial institutions and asset management companies from different regions; the average daily trading volume has increased from RMB 1.48 billion in the first month of opening. It rose more than ten times to RMB 19.5 billion in August this year.

In the first eight months of this year, Bond Connect accounted for 52% of the transaction volume in the mainland inter-bank bond market for foreign investors.

Since the launch of Bond Connect in July 2017, there has been a net increase of RMB 1.96 trillion in domestic bonds held by overseas institutions, of which 29% are held through Bond Connect.

　　Yu Weiwen said that after the launch of Bond Connect by the Monetary Authority and the People's Bank of China in 2017, the opening up of the bond market has increased significantly, and the efforts made in just two or three years have been generally recognized by international investors.

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