Memo of Understanding signed between Suning Clearing and London Clearing to promote the acceptance of offshore Renminbi bonds as eligible collateral.

The operator of market infrastructure fully owned by the Hong Kong Monetary Authority, ZCLEARSettlement Limited (ZCLEARSettlement), and London Clearing House Limited (LCH), a subsidiary of the London Stock Exchange Group, signed a memorandum of cooperation in Hong Kong today (June 9) to jointly support the development of clearing and settlement solutions for derivatives denominated in offshore Renminbi and other applicable currencies using the Hong Kong payment system infrastructure. According to the memorandum of cooperation, the two parties have also committed to collaborating to facilitate the acceptance of offshore Renminbi government bonds held on the Hong Kong Central Securities Depositary platform as eligible collateral for LCH clearing members. This cooperation will help international investors more efficiently manage their offshore Renminbi bond holdings, increase liquidity and capital efficiency, and enhance risk management capabilities. This memorandum of cooperation marks an important step for ZCLEARSettlement in promoting Chinese bonds as eligible collateral widely accepted in the international market. This development is built on a series of measures previously implemented by ZCLEARSettlement and the Hong Kong Monetary Authority. In February 2024, the HKMA included onshore government bonds and policy financial bonds in the eligible collateral range for its Renminbi liquidity arrangement. Starting from January 2025, these bonds held by international investors were approved as performance collateral for "delivery versus payment" transactions settled at OTC Clearing Corporation. In March 2025, the scope of eligible collateral for these bonds was further expanded to include all other derivative transactions settled by OTC Clearing Corporation. In February 2025, ZCLEARSettlement launched tri-party repo transactions for offshore investors to undertake repo transactions in Chinese mainland bonds held through Bond Connect in Hong Kong. ZCLEARSettlement CEO, Tan Daqiang, stated: "The cooperation between ZCLEARSettlement and LCH reflects the strong demand from international investors for offshore Renminbi bonds and related risk management tools. It also demonstrates the unparalleled role played by the Hong Kong payment and settlement infrastructure in supporting global investors in allocating offshore Renminbi bonds. We are pleased that Renminbi government bonds held on the Hong Kong Central Securities Depositary platform will be accepted as eligible collateral outside Hong Kong for the first time. ZCLEARSettlement will continue to collaborate with other market infrastructure, regulators, and market participants to expand our service coverage, further consolidating Hong Kong's position as an international financial center for Renminbi-related businesses." Susi de Verdelon, CEO of LCH, said: "We are excited to collaborate with ZCLEARSettlement, as well as our clearing member banks and clients, as we embark on ambitious plans to expand our services to market participants globally interested in trading and settling deliverable offshore Renminbi derivatives. The Asia-Pacific region remains a strategic focus for LCH, and we look forward to continuing our partnership to enable more financial institutions to benefit from the margin, capital, and operational efficiency enhancements brought by our services." Services are expected to be launched in the first half of 2026, with the specific timing depending on regulatory approval.