HSBC trades first renminbi non-deliverable swaption

HSBC has traded the first ever option on a renminbi non-deliverable interest rate swap, the bank said in a statement.

The transaction involved HSBC buying a five-year option to enter into a 50 million renminbi ($6.4 million) five-year non-deliverable interest rate swap (NDIRS) with a financial institution counterparty.

In August, HSBC and Standard Chartered Bank conducted the first ever renminbi non-deliverable interest rate swap transaction.

Anita Fung, head of global markets, Asia-Pacific at HSBC in Hong Kong, said: “Following the successful launch of NDIRS contracts in August, there has been a healthy pickup in activity, with the volume of such contracts reaching 6.7 billion renminbi in barely three months.”

“Development of the renminbi NDIRS swaption provides offshore market participants [with] the opportunity to hedge against the underlying risk, denominated in a currency that is not at this stage convertible on the capital account,” Fung added.

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As the trading of emerging markets currencies gathers pace and broader uncertainty sweeps across financial markets, CLS is exploring alternative services designed to mitigate settlement risk for the FX market

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