HKEX, CIPS sign MOU linking 210 banks to Hong Kong's RMB hub

Hong Kong Exchanges and Clearing Ltd. signed an MOU with the operator of China's Cross-border Interbank Payment System on Tuesday, paving the way for its clearing unit to settle yuan transactions directly through the network that connects 5,200 institutions across 191 countries.

"Direct access to CIPS would enhance OTC Clear's settlement capabilities and lay the foundation for HKEX's broader FIC product and infrastructure development," Bonnie Y Chan, chief executive officer of HKEX, said in a statement.

Under the agreement, HKEX's clearing subsidiary OTC Clearing Hong Kong Ltd. plans to submit an application to become a CIPS direct participant before the end of 2026. CIPS Co. Ltd., which operates the payment system, will provide guidance and training to support the application. As of June, CIPS had 210 direct participants, with its network spanning more than 5,200 banking institutions globally.

The move strengthens Hong Kong's infrastructure as the world's leading offshore RMB center at a time when China is pushing to internationalize its currency. Direct CIPS participation means OTC Clear can settle yuan transactions without intermediary banks, reducing costs and settlement times for participants trading RMB-denominated fixed income and currency products.

The MOU was exchanged at the 2026 Hong Kong FIC and Bond Connect Summit, witnessed by People's Bank of China Governor Pan Gongsheng, Hong Kong Chief Executive John Lee, and Financial Secretary Paul Chan. The high-level attendance signals the strategic importance Beijing places on Hong Kong's role in cross-border RMB flows.

CIPS Deepens Hong Kong's Financial Plumbing

CIPS, launched by the PBOC in 2015, serves as the primary channel for cross-border yuan payments and clearing, competing with SWIFT for China-linked transactions. For HKEX, becoming a direct participant means its OTC Clear unit can process RMB fund settlements directly through CIPS rather than routing through correspondent banks — a structural upgrade that improves efficiency for the exchange's growing fixed income and currency ecosystem.

The development comes as Hong Kong accelerates efforts to expand its RMB product suite. HKEX has been building out its FIC business, including the launch of 5-year China government bond futures in June and yuan-denominated products. The exchange's London Metal Exchange unit also recently increased the amount of offshore RMB that can be held as margin collateral, while the LME clearing house enhanced its collateral services.

Hong Kong is simultaneously expanding its commodity clearing infrastructure. The city is on the verge of launching its own gold clearing and settlement system with 11 banks participating, according to reports, while Singapore is developing a separate OTC gold clearing initiative targeting a rollout by the end of 2026.

What This Means for Global Investors

For institutional investors using Hong Kong as a gateway to China's onshore bond and currency markets, the direct CIPS link reduces settlement risk and operational friction. It also signals deepening integration between Hong Kong's financial infrastructure and China's domestic payment systems — a trend that could boost confidence in offshore RMB instruments and support the yuan's gradual rise as a reserve currency.

The PBOC has maintained the yuan's daily fixing at relatively stable levels this year, with USD/CNY trading around 6.79 as of Tuesday. The Hang Seng Index closed at 23,518, down 0.42%, while the CSI 300 fell 0.83% to 4,802. China's aggregate social financing, a broad measure of credit, has expanded as policymakers deploy monetary tools to support economic growth. The weighted-average reserve requirement ratio stands at about 7.0% after multiple cuts since 2023, with markets pricing additional easing in coming quarters.

The last time Hong Kong's financial infrastructure underwent a similar upgrade — the launch of Bond Connect in 2017 — offshore holdings of Chinese bonds surged by more than 1 trillion yuan over the following three years, according to PBOC data. Direct CIPS participation could produce a comparable acceleration in RMB-denominated clearing volumes through HKEX.

This article is for informational purposes only and does not constitute investment advice.