Key Takeaways:
Hong Kong's exchange operator will seek direct participation in China's cross-border payment system, deepening the city's role as the world's largest offshore yuan hub.
Hong Kong Exchanges and Clearing Ltd. signed an agreement with the operator of China's Cross-border Interbank Payment System to explore direct participation, strengthening the city's offshore yuan settlement infrastructure.
"Direct access to CIPS would enhance OTC Clear's settlement capabilities and lay the foundation for HKEX's broader FIC product and infrastructure development," Bonnie Y Chan, chief executive officer of HKEX, said.
Under the memorandum of understanding, HKEX's clearing subsidiary OTC Clearing Hong Kong Ltd. intends to apply to become a direct participant of CIPS and plans to submit its application materials before the end of 2026. CIPS Co. Ltd. will provide guidance and training to support the application. As of June, CIPS had 210 direct participants, with its operations covering more than 5,200 banking institutions across 191 countries and regions.
The move positions Hong Kong to capture a larger share of the growing offshore yuan market as China pushes for broader international use of its currency. Direct CIPS participation would allow OTC Clear to conduct yuan fund settlements directly through the system, reducing friction and costs for cross-border transactions.
The MOU was exchanged at the 2026 Hong Kong FIC and Bond Connect Summit, witnessed by People's Bank of China Governor Pan Gongsheng, Hong Kong Chief Executive John Lee, and Financial Secretary Paul Chan. CIPS Co. Ltd. Chairman Wang Hongbo joined Chan in signing the agreement.
Under the supervision of the PBoC, CIPS serves as the primary channel for cross-border yuan payments and clearing. The system has expanded rapidly since its launch in 2015, with direct participant numbers growing to 210 by mid-2026 from 176 in early 2025. The network now spans 191 countries, reflecting accelerating adoption of the yuan in trade settlement and investment flows.
For HKEX, the agreement supports its broader strategy to develop Hong Kong's fixed income and currencies ecosystem. The exchange has been expanding its FIC product suite, including yuan-denominated bonds and currency derivatives, as part of efforts to diversify beyond its core equities business. Direct CIPS access would give OTC Clear participants more efficient settlement, potentially driving higher volumes in HKEX's clearing services.
The partnership also signals deepening financial integration between Hong Kong and mainland China. Hong Kong remains the world's largest offshore yuan clearing center, processing about three-quarters of all offshore yuan payments, according to SWIFT data. The CIPS link reinforces that position by providing a direct pipeline to China's domestic payment infrastructure.
This article is for informational purposes only and does not constitute investment advice.
