OTC Clearing Hong Kong Limited (OTC Clear), a subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX) that provides clearing and settlement services for over-the-counter (OTC) derivative transactions, commenced clearing of US dollar – Hong Kong dollar Cross Currency Swaps (USD-HKD CCS) and extended the clearable tenor of both HKD Interest Rates Swaps (IRS) and HKD Basis Swaps from 10 years to 15 years on 30 April 2018.

The CCS clearing services will bring significant economic benefits to OTC Clear’s members through capital savings resulting from a reduction in their bilateral risk-weighted assets.  In addition, OTC Clear is the only central counterparty, or CCP, that accepts both HKD IRS and HKD Basis Swaps with tenors of up to 15 years for clearing.

The first USD-HKD Cross Currency Swap processed by OTC Clear was executed between Bank of China (Hong Kong) Limited and The Hongkong and Shanghai Banking Corporation Limited.

OTC Clear also added Deliverable FX (foreign exchange or forex) Forward and FX Swap clearing services for trades denominated in USD/CNH and USD/HKD on 30 April. 

“We are delighted to further enrich our clearable product set and extend our home currency (HKD) product offering to meet the demand of our local and regional market participants.” said Calvin Tai, HKEX’s Joint-Chief Operating Officer and Head of Clearing.  “With the addition of USD/HKD CCS and USD/HKD deliverable forex clearing, OTC Clear offers a comprehensive solution for the management of HKD portfolios, as the cross product margining would help banks to optimise the margins when clearing USD/HKD CCS and HKD IRS together.”

For a full list of the products OTC Clear handles, please see the OTC Clear section of the HKEX website.

OTC Clear is a central counterparty, or CCP, established by HKEX for the purpose of providing clearing and settlement services for OTC derivative transactions.  HKEX owns 75 per cent of OTC Clear and 12 financial institutions own 25 per cent.  For additional information, please see the overview on the HKEX website.

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