Swap Connect shines light on US client clearing hurdles

New scheme may intensify calls for CFTC to reassess its exempt DCO limitations

For US asset managers holding Chinese government bond assets, the launch of the Swap Connect scheme this month should be cause for celebration.

The long-awaited programme, launched on May 15, allows foreign investors to more easily tap the Chinese interbank market and enter into onshore renminbi (CNY) interest rate swaps deliverable in the local currency, to hedge interest rate risk on their bond holdings.

Up until now, they’ve been limited to non-deliverable CNY interest rate swaps that

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