18 September 2021

Southbound Trading under Bond Connect to launch soon, further promoting two-way opening up of China's financial markets

On September 15, 2021, the People’s Bank of China (PBOC) and Hong Kong Monetary Authority (HKMA) jointly announced that the cooperation in southbound bond market access between Mainland China and Hong Kong (“Southbound Trading”) will officially launch on September 24, 2021. Under Southbound Trading, Mainland institutional investors may invest in bonds traded in the Hong Kong bond market through mutual access arrangements between the financial infrastructures in Mainland China and Hong Kong regarding bond trading, custody, settlement, etc. Southbound Trading marks another important initiative of the Central Government to support the continued development of Hong Kong and enhanced cooperation between the Mainland and Hong Kong. It is conducive to the diversification of investment access channels for Mainland institutional investors, to the steady and progressive two-way opening up of the Mainland financial markets, to the enhancement of Hong Kong’s competitive advantages and reinforcement of Hong Kong’s status as an international financial centre for its long-term and sustained prosperity and stability.

King & Wood Mallesons is the legal counsel to the China Foreign Exchange Trade System (National Interbank Funding Center) (“CFETS”) and has been supporting CFETS for the smooth implementation of Southbound Trading. As a critical financial infrastructure for Southbound Trading, CFETS provides one-stop, multi-currency and multi-mechanism services for domestic institutions to invest in and trade in global bonds. In 2017, the KWM team assisted CFETS in successfully implementing the debut launch of Northbound Trading under Bond Connect.

The KWM team provided full-cycle, all-around and high-quality legal services to CFETS in this project, combining the team’s extensive experience in the financial markets to ensure the smooth implementation of the Southbound Trading. KWM’s lead partner for the project is Molly Su from the Shanghai office, and the lead partner for Hong Kong law is Minny Siu from the Hong Kong office. The team members for this project are Xi Suodi and Zhao Zhenan from the Shanghai office.

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