HKFE Clearing Corporation has confirmed 2 November 2026 as the start date for accepting eligible Chinese government and policy-bank bonds as margin collateral. Its 16 October circular records Securities and Futures Commission approval, moving the initiative into implementation.[1]
HKEX had announced the wider programme for HKCC and its options clearing house, SEOCH, on 25 September, subject to approval. It covers qualifying onshore bonds held through Northbound Bond Connect and offshore Ministry of Finance bonds. The purpose is to let existing bond holdings support derivatives positions, reducing the need to raise separate cash collateral.[2]
HKCC terms from 2 November 2026
| Item | Published position |
|---|---|
| Non-cash margin coverage | Up to 50% of a clearing participant’s margin requirementSource 1 |
| Currency exceptions | JPY- and SGD-denominated contracts require 100% settlement-currency cashSource 3 |
| Annual accommodation charge | Falls from 0.25% to 0.15% on collateral value used for margin, after haircutsSource 1 |
| Valuation controls | Maturity-dependent bond haircuts, additional FX haircuts and concentration limits applySource 1 |
For illustration, a constant HK$100 million of chargeable value after haircuts would cost HK$150,000 a year at 0.15%, versus HK$250,000 at 0.25%. That isolates the accommodation charge; custody and other commercial costs sit outside the calculation.[1]
For Bond Connect clients, access requires an eligible investor’s own positions and a segregated individual client or segregated client market-maker account. Existing positions and collateral must migrate into that arrangement. The client must be directly onboarded with the clearing participant; an account with an affiliate does not qualify.[3]
The legal mechanism is outright title transfer. Direct delivery from a client’s custodian is treated as transfer through the clearing participant to HKCC or SEOCH. Separate client accounting prevents offset against other clients at a participant default, while the bonds remain exposed to the clearing house’s insolvency risk.[3]
Investors initiate collateral movements through both their clearing participant and custodian. The FAQ sets an 11:00 a.m. Hong Kong request cut-off on a trading day that is also a business day; withdrawals return to the originating Bond Connect account after matching instructions.[3]
Sources & further reading
- HKCC circular PT/SCS/069/2026: launch and collateral terms HKEX · 16 Oct 2026 · Accessed 20 Oct 2026
- September announcement of planned bond collateral expansion HKEX · 25 Sep 2026 · Accessed 20 Oct 2026
- China government bonds as collateral: eligibility, accounts and transfers HKEX and CMU · Accessed 20 Oct 2026