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Hong Kong chief executive John Lee hailed the Swap Connect programme as a ‘milestone’ in the city’s financial integration with mainland China © AFP via Getty Images

The launch of Hong Kong’s Swap Connect programme, giving global investors easy access to China’s $5tn swap market, is facing delays, according to people familiar with the situation, with regulators in Beijing failing to finalise rules necessary for the trading scheme’s operation.

Swap Connect, announced during Chinese president Xi Jinping’s high-profile visit to the city in July, has been positioned by officials as an important new channel for the further opening up of China’s vast onshore markets.

The move was also celebrated as a boon for Hong Kong, where Covid-19 restrictions have throttled the economy and undermined the financial sector’s competitiveness.

The programme, however, will probably miss its target launch window of early January, two people familiar with the matter said, since regulators in Beijing have yet to publish even basic information on the final rules for the programme nearly five months after its unveiling.

“There’s a lot of interest from financial institutions, but no one has seen any details,” said the head of one industry organisation in Hong Kong, adding that regulators in the city and in mainland China would need to work through a number of pressing questions before any rules could be published.

“This involves complex jurisdictional and legal issues,” the industry head said. “It’s not just about trade execution. I don’t see how it can be achieved by early January.”

Swap Connect is in the same mould as Hong Kong’s successful Stock Connect and Bond Connect programmes, which let offshore investors access China’s onshore debt and equity markets in Shanghai and Shenzhen.

Read more about the Swap Connect delay here.

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