(Adds details and background)
SHANGHAI, Feb 17 (Reuters) - China's central bank issued
draft rules on late Friday seeking public opinions on the "Swap
Connect" scheme between mainland China and Hong Kong, marking
the latest move to further open up the country's capital
markets.
The new scheme, once launched, will allow mutual access to
interest rate swaps trading to promote financial derivatives
markets, and also upgraded a separate currency swap agreement.
The trading link would standardize the interest rate swap
businesses, and "protect the legitimate rights and interests of
domestic and foreign investors, and maintain the order of the
interest rate swap market", the People's Bank of China said in
an online statement.
Interest rate swap (IRS) is a practice in which two parties
exchange interest payments through a derivative contract, and
the connect scheme would allow overseas investors to hedge their
risks when they invest in onshore markets.
Earlier this week, the PBOC said it would deepen the opening
up of yuan derivative markets.
(Reporting by Beijing Newsroom; Editing by Alex Richardson)
Messaging: winni.zhou.thomsonreuters.com@reuters.net))
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