Xu Zhengyu: Taking multiple measures to promote the development of the local bond market in Hong Kong.

On February 4th, the Secretary for Financial Services and the Treasury of Hong Kong, Christopher Hui, replied to questions from legislators, stating that the Hong Kong government has been committed to promoting the development of the local bond market, aiming to enhance Hong Kong's role as an international financial center with diversified functions. Through innovative means of regularly issuing government bonds (including institutional, retail, green, and tokenized bonds), activating the market, enhancing market infrastructure, implementing issuance support (such as green and sustainable finance assistance programs), and tax incentives (such as the Qualified Debt Instrument Scheme), Hong Kong has developed into the hub for international bond issuance in Asia. Calculating the size of bonds issued by Asian institutions internationally, Hong Kong has ranked first in the region for seventeen consecutive years since 2008, with ten of those years being the top in the world. In 2024, bond issuances arranged through Hong Kong exceeded USD 130 billion, with a market share of nearly thirty percent. Hong Kong accounted for approximately seventy percent of the initial bond issuance market and forty-five percent of the green and sustainable bond issuance market, confirming its leading position in various sectors. In addition, the offshore RMB bond market in Hong Kong has flourished in recent years, with RMB bond issuances reaching RMB 1.07 trillion in 2024, a thirty-seven percent year-on-year increase, marking seven consecutive years of growth since 2017. The "Policy Address 2025" proposes to continue building a leading bond market and a vibrant currency market. The Hong Kong government and financial regulatory agencies are promoting a series of measures to facilitate primary market issuance, enhance secondary market liquidity, expand offshore RMB business, and promote new generation infrastructure, further solidifying Hong Kong's strategic position as a fixed-income and currency center. The Securities and Futures Commission and the Hong Kong Monetary Authority jointly released the "Roadmap for Fixed-income and Currency Markets Development" in September 2025 detailing these measures. As of January 2, 2026, there are 1351 listed bonds on the Hong Kong Stock Exchange, with 1302 bonds issued to professional investors under Chapter 37 of the Listing Rules (Chapter 37 bonds). While Chapter 37 bonds are listed on the Hong Kong Stock Exchange, they are generally traded over-the-counter (OTC) rather than on the exchange. In addition, bonds are typically held until maturity, which may limit liquidity in the exchange market for Chapter 37 bonds. Different from bonds sold to retail investors, Chapter 37 provides a streamlined and expedited process for bond listing, with the Hong Kong Stock Exchange adopting a more lenient approval approach. As Chapter 37 does not specify the types of bonds that can be listed, bonds with special or complex features (e.g., perpetual or subordinated nature, or bonds with floating or deferred interest payment terms) can be listed under Chapter 37, which may not necessarily be suitable for retail investors. To enhance the overall liquidity of the bond market, the Securities and Futures Commission is studying the feasibility of a bond electronic trading platform operated by the market. The Securities and Futures Commission has appointed external consultants and begun discussions with market participants, market operators, and regulatory authorities. Simultaneously, the Securities and Futures Commission is actively promoting the establishment of a commercial repo market and central counterparty system in Hong Kong, including feasibility studies on related settlement systems. Hong Kong will continue to actively promote the measures listed in the "Roadmap for Fixed-income and Currency Markets Development," aiming to build a solid foundation for further development of the bond market in Hong Kong by enhancing market efficiency, trading transparency, and reducing counterparty credit risks. The Hong Kong Stock Exchange has been dedicated to enhancing the vitality and competitiveness of the Hong Kong securities and derivatives market. Since January 2025, the Hong Kong Offshore Clearing Company has begun accepting offshore investors to use onshore government bonds and policy financial bonds in their Bond Connect holdings as collateral for the Northbound Stock Connect, expanding it to all derivative products from March of the same year. These measures further broaden the use of onshore RMB bonds as collateral in offshore markets, providing international investors with greater flexibility and capital efficiency, enhancing the attractiveness of RMB assets, and promoting RMB internationalization. The Hong Kong Stock Exchange will continue to collaborate closely with various market participants to review relevant collateral arrangements, explore the inclusion of new products under various risks to provide investors with more diversified collateral choices and further reinforce Hong Kong's position as a hub for global offshore RMB business and a leading risk management center. The Hong Kong government, financial regulatory agencies, and the Hong Kong Stock Exchange have been committed to deepening and expanding the mutual connection of the capital markets between the two places. With strong support from the Central People's Government, a series of incremental capacity expansion measures such as Bond Connect, Cross-border Wealth Management Connect, inclusion of exchange-traded funds as mutual connection targets, Stock Connect, etc., have been implemented in recent years. As of the end of December 2025, the total size of domestic bonds held by overseas institutions through Bond Connect and other channels exceeded RMB 3.4 trillion, with the daily trading volume of Bond Connect Northbound reaching approximately RMB 39 billion in 2025. As global investors' demand for RMB-denominated products increases, Hong Kong's role as a hub for global offshore RMB business and a risk management center becomes more important. The Hong Kong Special Administrative Region Government is committed to enriching RMB-denominated investment products and risk management tools to meet the needs of investors from home and abroad. Both regulatory authorities have announced their support for the introduction of offshore sovereign bond futures in Hong Kong, to introduce effective offshore risk management tools for investing in government bonds in Hong Kong. The relevant preparatory work has been largely completed, and the Securities and Futures Commission will continue to work closely with the Hong Kong Stock Exchange to implement the measures. The Hong Kong Stock Exchange will continue to enrich its derivatives product range and adopt a positive attitude towards issuing new products, including derivatives with assets from other economies as underlying assets. In addition, since 2023, the Hong Kong government has issued three batches of tokenized green bonds and will continue to issue tokenized bonds in the future, aiming to set examples in the market and provide high-quality tokenized bond supply to drive the broader development of Hong Kong's tokenized bond market. For example, in November 2025, the issuance of tokenized green bonds successfully expanded market participation, with an issuance amount of HKD 10 billion, the world's largest tokenized bond issuance at the time. This batch of bonds was well received by a wide range of global institutional investors, including many first-time investors in tokenized bonds, with a total subscription amount exceeding HKD 130 billion equivalent. To enhance the attractiveness and demand for tokenized bonds, the Hong Kong Monetary Authority is studying the application scenarios of the secondary market for tokenized bonds, such as using digitally native bonds and tokenized already issued traditional bonds as repurchase financing collateral, with research results to be announced in due course. Additionally, the Hong Kong government and the Hong Kong Monetary Authority are jointly studying the current legal framework to explore optimization measures to further promote the broader application of tokenization technology in Hong Kong's bond market. In terms of retail investor participation, the Hong Kong Monetary Authority completed a conceptual proof through Project Genesis with the Innovation Hub of the Bank for International Settlements. However, realizing the concept involves multiple layers of law, technology, and operations, requiring coordination among different participants in the entire issuance chain. The Hong Kong Monetary Authority is evaluating whether the current form of tokenized bonds can meet the needs of retail investors. The Hong Kong government and regulatory agencies will continue to communicate with the industry to explore how to effectively and appropriately apply tokenized bonds to the retail level.