The Hong Kong Monetary Authority (HKMA) and the Monetary Authority of Macao (AMCM) jointly announced on 21 January 2025 the official launch of the direct linkage between the Central Moneymarkets Unit (CMU) operated by CMU OmniClear Limited (a wholly-owned subsidiary of the Exchange Fund), and the central securities depository (CSD) operated by Macao Central Securities Depository and Clearing Limited (a wholly-owned subsidiary of the AMCM). The direct linkage aims to promote the development of the bond markets in the two regions.

Since the joint announcement on 16 September 2024, the HKMA and the AMCM have co-operated closely to prepare for the launch of the direct linkage and to jointly develop the business arrangements and operational procedures. The connection between the bond market infrastructures in Hong Kong and Macao will provide a cross-border investment and financing channel, enabling investors from both markets to participate in each other's bond market with greater ease and efficiency. The direct linkage also signifies a new milestone in financial co-operation between Hong Kong and Macao, leveraging the strengths of both regions and demonstrating the synergistic development of the Guangdong-Hong Kong-Macao Greater Bay Area.

Chief Executive of the HKMA, Mr Eddie Yue, said "To enhance the competitiveness of Hong Kong as an international financial centre, the HKMA has established connectivity with various neighbouring financial markets over the years, and continues to explore direct linkages with other central securities depositories. The direct linkage showcases Hong Kong's role as a 'super-connector' and represents a major step towards developing the CMU into an international CSD in Asia."

Chairman of the AMCM, Mr Benjamin Chan, said "The official launch of the direct linkage between the bond markets of Macao and Hong Kong achieved the first connectivity of Macao's bond market infrastructure established with a CSD located outside of Macao. This will provide international investors, including those from Portuguese-speaking countries, with a convenient channel to participate in the bond markets of Macao and Hong Kong, further strengthening Macao's function as the financial services platform serving China and Portuguese speaking countries. The AMCM will continue to establish connectivity with the bond markets in Mainland and international markets, to gradually expand new financial services and to support the development of appropriate economic diversification for Macao."

For relevant press release, please visit https://www.info.gov.hk/gia/general/202501/21/P2025012000459.htm.

The Government published in the Gazette on 17 January 2025 the Import and Export (Strategic Commodities) Regulations (Amendment of Schedule 1) Order 2025 (Order) to amend the control list of strategic commodities set out in the Import and Export (Strategic Commodities) Regulations (Cap. 60, sub. leg. G).

A spokesman for the TID said, "As a responsible trading partner and an international trading hub, Hong Kong has been updating our control lists of strategic commodities from time to time to align with the controls adopted by leading international regimes and convention of non-proliferation of weapons of mass destruction, namely, the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies, the Nuclear Suppliers Group, the Missile Technology Control Regime, the Australia Group, the Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on their Destruction, and the Arms Trade Treaty. The last updated control list came into effect in November 2023."

"The current amendments serve to reflect the recent updates and changes on the control lists adopted by the international regimes with respect to the technologies and items under control as well as the control thresholds in view of the international security developments, technological changes and market trends."

The Order has been tabled at the Legislative Council on 22 January 2025. The Government plans to bring the Order into effect in the second quarter of 2025.

The TID will inform traders of the details of the amendments via a trade circular and through its website (www.stc.tid.gov.hk/eindex.html). Enquiries can be made to the Strategic Trade Controls Branch of the department by telephone at 2398 5587 or by email at stc@tid.gov.hk.

For relevant press release, please visit https://www.info.gov.hk/gia/general/202501/17/P2025011700158.htm.

Applications invited for Main Fund of Sir David Trench Fund for Recreation

The HKMA and the People's Bank of China (PBoC) announce on 13 January 2025 new policy measures to deepen the financial market connectivity between Hong Kong and the Mainland, and consolidate Hong Kong's status as the global offshore RMB business hub. These measures include:

1. Introduction of the HKMA RMB Trade Financing Liquidity Facility: The HKMA will introduce an RMB Trade Financing Liquidity Facility for banks in Hong Kong as a stable source of relatively lower-cost RMB funds, so as to support banks in providing RMB trade finance services to their corporate customers. The new facility has a total size of RMB100 billion. The HKMA will offer 1-month, 3-month and 6-month RMB funds, with interest rates referencing onshore interest rates plus a spread. The new facility, apart from operating through repo transactions same as the existing RMB Liquidity Facility, will introduce currency swap where banks can swap their HKD funds for RMB funds with the HKMA. The HKMA will obtain the needed RMB funds from the PBoC through the Currency Swap Agreement between the two institutions. 

The new facility will further enhance the liquidity of Hong Kong's offshore RMB market, meet enterprises' increasing funding demand for RMB trade financing, and strengthen Hong Kong's leading position as the global offshore RMB business hub. Details of the facility will be announced by the HKMA in due course, with the launch expected to take place by late February.

2. Further enhancement and expansion of Bond Connect (Southbound): Building on the smooth operation of Southbound Bond Connect, the HKMA and the PBoC will jointly implement a series of enhancement and expansion measures, including:

• Extending the settlement time under the Central Securities Depositories (CSDs) linkage;
• Supporting the settlement of multi-currency bonds in RMB, Hong Kong dollar, US dollar and euro through the CSDs linkage; and
• Further out, expanding the scope of eligible Mainland investors in due course.

These measures will further broaden the overseas investment channels for Mainland institutional investors, address their needs for diversified asset allocation, and improve transaction and settlement efficiency. They will also bolster the development of the Hong Kong bond market, particularly the Dim Sum bond market.

3. Offshore RMB repurchase (repo) using Northbound Bond Connect bonds as collateral: The HKMA supports developing offshore RMB repo business using Northbound Bond Connect bonds as collateral, with a view to establishing a market-based arrangement for offshore RMB liquidity management that will enhance Hong Kong's competitiveness as an offshore RMB business hub. This business will be launched soon. For more details, please refer to the HKMA press release.

4. Inclusion of Northbound Bond Connect bonds as eligible margin collateral at OTC Clearing Hong Kong Limited (OTCC): The HKMA, the PBoC, and the Securities and Futures Commission have reached consensus to support offshore investors to use onshore bonds issued by the Ministry of Finance and Mainland policy banks that are held under Northbound Bond Connect as eligible margin collateral for derivative transactions at the OTCC. Further details will be announced in due course.

In recent years, relevant financial regulators in both the Mainland and Hong Kong have been working closely to actively promote the use of onshore RMB bonds as eligible collateral in offshore markets. Starting from 26 February 2024, the HKMA has expanded the list of eligible collateral for the HKMA's RMB Liquidity Facility to include RMB bonds issued onshore by the Ministry of Finance and the policy banks on the Mainland. In July 2024, relevant authorities in Hong Kong and the Mainland announced further support for offshore investors to use onshore bonds held under Bond Connect as margin collateral for Northbound Swap Connect. This measure was officially implemented on 13 January 2025. The new measures announced on 13 January will help further reduce the cost of RMB business for market participants, enhance capital efficiency, and vitalise offshore investors' onshore bond holdings, thereby enhancing the attractiveness of onshore bonds and RMB assets to investors.

5. Cross-boundary payment facilitation: The HKMA and the PBoC are working closely together to implement the linkage of faster payment systems in the Mainland and Hong Kong (i.e. the Mainland's Internet Banking Payment System (IBPS) and Hong Kong's Faster Payment System (FPS)). This linkage, which operates 24x7, can support residents in both places in making real-time, small-value, cross-boundary remittances, by entering the recipient's mobile number or account number. Some services are expected to be launched around mid-2025. Subject to the experience gained upon implementation, the service will be gradually enhanced over time. This will help support broader economic co-operation and exchange between the two places.

In addition, to address frequently asked questions from the industry and the public regarding cross-boundary remittance services, the HKMA has just published an FAQ clarifying and explaining the current policy arrangements for various cross-boundary remittance scenarios. 

6. GBA financial facilitation: The HKMA welcomes the inclusion of new participating banks by the PBoC to offer account opening by attestation services for Hong Kong residents, providing Hong Kong residents with higher-quality and more convenient payment service for consumption, everyday life, and commute on the Mainland.
 
For relevant press release, please visit https://www.info.gov.hk/gia/general/202501/13/P2025011300240.htm.

The HKMA launched the Supervisory Incubator for Distributed Ledger Technology (the Incubator) on 8 January 2025 to help banks responsibly unlock the transformative potential of distributed ledger technology (DLT).
 
The Incubator is a new supervisory arrangement designed to help banks maximise the potential benefits of DLT adoption by effectively managing the associated risks. It will augment risk management capabilities at both the individual bank and industry levels, with a particular focus on addressing those risks that may arise as banks move to productionise relevant services (e.g. deposits and loans) that cut across DLT-based and legacy banking infrastructures. As part of this effort, tokenised deposits - which have attracted significant production interest from industry - will be a core focus upon the Incubator's inception.
 
For relevant press release, please visit https://www.info.gov.hk/gia/general/202501/08/P2025010700489.htm.

The Government welcomes the Legislative Council's passage of the Companies (Amendment) Bill 2024 on 8 January 2025 to enable listed companies incorporated in Hong Kong to hold shares bought back in the treasury and dispose of them under certain restrictions, and promote paperless corporate communication for both listed and unlisted Hong Kong companies.
 
The Secretary for Financial Services and the Treasury, Mr Christopher Hui, said, "The two measures will help enhance the competitiveness of Hong Kong as an international business and financial centre. Establishing a treasury share regime that is in line with international practice would allow listed companies, including Hong Kong incorporated companies, to hold bought-back shares and sell or transfer treasury shares, providing more flexibility to listed companies to manage their capital. On the other hand, the proposed implied consent mechanism serves to promote paperless corporate communication, thereby enhancing the cost-effectiveness and operational efficiency of companies."
 
The Amendment Ordinance has been published in the Gazette on 17 January 2025. To allow sufficient time for companies to make preparations, the new arrangements will come into effect three months after the Amendment Ordinance is published in the Gazette.
 
For relevant press release, please visit https://www.info.gov.hk/gia/general/202501/08/P2025010800248.htm.

1 000 regular quotas for Hong Kong cross-boundary non-commercial private cars using the Hong Kong-Zhuhai-Macao Bridge (HZMB) to Macao (Hong Kong quotas) have been open for application from 13 January 2025.
 
Eligible applicants for Hong Kong quotas may submit their applications through the GovHK website (www.gov.hk/regularquotahkpctomacao) from 9am on 13 January to 5.15pm on 24 January. A ballot will be conducted following the application deadline. Successful balloting applicants will be required to submit supporting documents to prove their eligibility on or before the ballot registration deadline (i.e. 24 January).
 
For details of the application criteria, procedures and licensing requirements of Hong Kong quotas, please visit the TD's website or call 2804 2600 for enquiries.
 
For relevant press release, please visit https://www.info.gov.hk/gia/general/202501/06/P2025010300256.htm.