
Swap Connect growth hampered by unwinding issues
Users’ inability to trade bespoke swaps to unwind positions deters foreign investors

While China’s Swap Connect structure was unveiled with great fanfare in May, one significant flaw is keeping many foreign investors from using it: they can’t unwind their positions.
Launched on May 15, Swap Connect gives foreign investors access to China’s onshore interest rate swap market, which allows them to hedge their onshore China bond exposures.
Under the scheme, foreign investors face the Hong Kong Exchange’s (HKEX) central counterparty – OTC Clear – while their onshore counterparties
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