OCBC Singapore HQ has joined OTC Clearing Hong Kong Limited, a subsidiary of Hong Kong Exchanges and Clearing Limited as a direct clearing member. In addition, it has become a direct clearing member of LCH SwapClear, LCH’s Interest Rate Swap (IRS) clearing service. Both memberships are in line with the bank’s ASEAN- Greater China focus.
This it said was to meet the increasing demand for hedging products. The total volume of HKD and CNH cross-currency swaps transacted in 1H2023 was more than 50% higher year-on-year.
In the first half of 2023, OCBC’s CCS volumes in HKD and CNH currencies increased by more than 50% compared to the same period a year ago, driven by demand from its trading activities and customers. Strong interest was seen particularly from OCBC’s Singapore and Hong Kong SAR customers. The membership gives OCBC access to clearing services for over-the-counter (OTC) derivatives in CCS and interest rate swaps (IRS) for HKD and CNH. Central clearing for these derivatives will lower costs and mitigate counterparty risks.
OTC Clear is the only central clearing party licensed by the Monetary Authority of Singapore (MAS) that can accept banks incorporated in mainland China, as well as Chinese banks in Hong Kong SAR as direct clearing members. OCBC, as a direct clearing member, will benefit by being able to access more Chinese banks as counterparties.
As a direct clearing member of OTC Clear, OCBC can participate in Swap Connect, which launched its Northbound channel in May 2023. Swap Connect gives Hong Kong SAR and international investors access to mainland China’s onshore interbank interest rate swap market. This is especially important for investors who may want to hedge risks arising from their participation in China’s bond market.
All banking subsidiaries within OCBC Group – including OCBC Malaysia, OCBC Hong Kong, and OCBC NISP in Indonesia – can leverage this membership to tap into LCH SwapClear’s deep liquidity and and interest rate products in 27 currencies including the Singapore dollar.
