Source: Hong Kong Government special administrative region
Following is a question by the Hon Robert Lee and a written reply by the Secretary for Financial Services and the Treasury, Mr Christopher Hui, in the Legislative Council today (February 4):
Question:
The 2025 Policy Address proposed that the Government would further consolidate Hong Kong’s position as a bond market hub, including, among others, improving market liquidity, promoting the use of offshore Chinese Government Bonds as collateral in different clearing houses, and introducing offshore treasury bond futures in Hong Kong. In this connection, will the Government inform this Council:
(1) as there are views pointing out that many listed bonds have weak trading volumes, what measures the Government has put in place to invigorate the bond market and thereby increase the trading volumes of such bonds; whether it will urge the regulatory bodies to re-examine the qualification requirements for professional investors and lower the entry threshold for such bonds, so that more retail investors can engage in bond trading;
(2) whether there is currently a specific implementation timetable for promoting the use of offshore Chinese Government Bonds as collateral in different clearing houses; whether the Government will study promoting in different clearing houses the gradual expansion of the range of acceptable collateral to include eurozone government bonds and sovereign bonds from other economically developed countries;
(3) what measures the Government has put in place to expedite the implementation of the policy to introduce offshore treasury bond futures in Hong Kong; whether it will consider introducing futures products of sovereign bonds from other economically developed countries; and
(4) as the Government announced in the 2025-2026 Budget that it would actively explore tokenising traditional bonds issued, of the current progress of implementing the relevant policy; whether it will consider engaging more retail investors and financial intermediaries in the relevant tokenisation process?
Reply:
President,
The Government has been striving to promote the development of the local bond market, with a view to enabling Hong Kong performing a more diversified function as an international financial centre. Through providing impetus to the market by issuing government bonds regularly in innovative ways (such as issuance of institutional, retail, green and tokenised bonds), enhancing market infrastructure, as well as issuance subsidy schemes (e.g. the Green and Sustainable Finance Grant Scheme) and tax incentive schemes (e.g. the Qualifying Debt Instrument Scheme) and others, Hong Kong has developed into a hub for international bond issuance in Asia. In terms of bonds issued internationally by Asia-based entities, Hong Kong ranked first in the region for seventeen consecutive years since 2008, with ten years ranking first globally. The volume of Asian international bonds arranged in Hong Kong totalled over US$130 billion and accounted for around 30 per cent of the market in 2024. Among these issuances, Hong Kong has captured around 70 per cent of debut issuances, and 45 per cent green and sustainable bond issuances, demonstrating our leading position in different segments. Meanwhile, offshore RMB (Renminbi) bond market in Hong Kong recorded solid development over the past few years, with offshore RMB bond issuance reaching RMB1.07 trillion in 2024, having increased by 37 per cent year-on-year and expanded for seven years in a row since 2017.
As stated in the Chief Executive’s 2025 Policy Address, we will continue to expand a world-class bond market and a vibrant currency market. The Government and financial regulators are taking forward a series of measures, including boosting issuance in primary market, enhancing liquidity in secondary market, expanding offshore Renminbi business, and next-generation infrastructure, with a view to further consolidating Hong Kong’s strategic position as a leading Fixed Income and Currency (FIC) hub. The Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) jointly announced the Roadmap for the Development of FIC Markets (Roadmap) in September 2025 which outlined the relevant initiatives.
After consultation with the HKMA, the SFC and Hong Kong Exchanges and Clearing Limited (HKEX), the reply to the various parts of the question is as follows:
(1) Regarding the current situation of listed bonds, as of January 2, 2026, there were 1 351 listed bonds on HKEX, of which 1 302 were issued to professional investors under Chapter 37 of the Listing Rules (Chapter 37 Bonds). While Chapter 37 Bonds are listed on HKEX, such bonds are generally traded over-the-counter rather than on HKEX. Moreover, bonds are typically held-to-maturity investment products, with investors often purchasing them with the intention of holding until maturity, therefore Chapter 37 Bonds may not have ample liquidity in the listed market.
In contrast to bonds offered to retail investors, Chapter 37 offers a streamlined and expedient listing process for bonds under which HKEX adopts a “light touch” approach for vetting. Since Chapter 37 does not prescribe the type of bonds that could be listed and accordingly bonds with special or complex features (such as perpetual or subordinated bonds, or those with variable or deferred interest payment terms) could be listed under Chapter 37, relevant bonds may not be suitable for retail investors.
To enhance the overall bond market liquidity, the SFC is studying the feasibility of an electronic bond-trading platform built and operated by market participants. In this regard, the SFC has appointed external consultants, and has begun interviews with market participants, market operators and regulatory authorities. Meanwhile, the SFC is also actively promoting the establishment of a commercial repo (repurchase) market and a central counterparty regime in Hong Kong, including conducting a feasibility study on setting up the relevant clearing system. We are committed to implementing the initiatives outlined in the Roadmap continuously, with a view to establishing a solid foundation for the further development of our bond market development, through enhancing market efficiency and transaction transparency, as well as reducing counterparty credit risk.
(2) HKEX is committed to enhancing the vitality and competitiveness of Hong Kong’s securities and derivatives markets. Since January 2025, the OTC Clearing Hong Kong Limited has started accepting onshore Chinese Government Bonds and Policy Bank Bonds held by offshore investors through Bond Connect as collateral for Northbound Swap Connect transactions, and extended the arrangement to all derivative transactions from March of the same year. The measure could further broaden the use of onshore Renminbi bonds as collateral in offshore markets, offering international investors greater flexibility and improved capital efficiency. This further enhances the attractiveness of RMB assets and advances RMB internationalisation. HKEX will continue to collaborate closely with market participants, regularly review relevant collateral arrangements, and explore incorporating new products while balancing various risks. These will provide investors with more diversified collateral options, further consolidating Hong Kong’s position as a global offshore RMB business hub and a leading risk management centre.
(3) The Government, financial regulators and HKEX are committed to deepening and broadening the mutual access between the Mainland and Hong Kong capital markets. With the strong support of the Central People’s Government, a series of expansion measures were implemented in recent years successively, including Bond Connect, Cross-boundary Wealth Management Connect, inclusion of exchange-traded funds under mutual access, Swap Connect, etc. Notably, as of end-December 2025, the total amount of foreign holdings of Mainland onshore bonds through different channels including Bond Connect exceeded RMB3,400 billion. The average daily turnover of Northbound Bond Connect in 2025 reached about RMB39 billion.
As global investors’ demand for RMB-denominated products grows, Hong Kong’s role as a global offshore RMB business hub and risk management centre becomes increasingly important. The Government is committed to continuously enriching the suite of RMB-denominated investment products and risk management tools to meet the needs of both domestic and overseas investors. The regulators of the Mainland and Hong Kong have announced their support for the launch of offshore treasury bond futures in Hong Kong, introducing an effective offshore risk management tool for investing in Chinese Government Bonds in Hong Kong. The relevant preparatory work has been largely completed. The SFC will continue to work closely with HKEX to implement the measure.
In addition, HKEX will continue to expand its derivatives product suite and maintain a positive and open stance towards issuing new products, including derivatives with assets from other economies as underlying assets.
(4) The Government has issued three tranches of tokenised green bonds since 2023. Through continuous tokenised bond issuances, the Government expects to promote the broader development of Hong Kong’s tokenised bond market by creating demonstrative effects and supplying the market with high quality tokenised bonds. For instance, the tokenised green bond issuance in November 2025 successfully scaled up market participation, with an issuance size of HK$10 billion, marking the world’s largest tokenised bond at the time. This issuance was well received by a wide spectrum of global institutional investors, including a substantial number of first-time tokenised bond investors, reaching a total subscription amount over HK$130 billion. Compared to the previous issuances, the number of arranging banks and direct participants to the relevant digital assets platform also increased.
To enhance the attractiveness and demand for tokenised bonds, the HKMA is also exploring secondary market applications of tokenised bonds, which include using digitally native bonds and tokenised version of existing bonds as collaterals for repo financing. Results of the study will be announced in due course. In addition, the Government is working with the HKMA to review the current legal regime and identify potential enhancements, with a view to promoting the wider adoption of tokenisation in Hong Kong’s bond market.
Regarding retail investor participation, in collaboration with the Bank for International Settlements Innovation Hub, the HKMA completed a proof-of-concept study through Project Genesis. However, implementation of the relevant concept would involve multiple aspects, including legal, technical, and operational aspects, and would require collaboration among various parties in the entire issuance chain. At the same time, the HKMA is also assessing whether the current form of tokenised bonds can meet the needs of retail investors. The Government and regulators will continue to engage with the industry to explore how tokenised bonds can be effectively and suitably applied at the retail level.