HKEX Launches First Offshore Five-Year China Government Bond Futures

Exchange group Hong Kong Exchanges and Clearing Limited (HKEX) began trading in its Five-Year China Government Bond (CGB) Futures contract on Monday, introducing the only CGB futures contract available in the offshore market and adding a listed interest-rate hedging tool to Hong Kong's fixed-income and currencies (FIC) product range.

The contract references five-year China Government Bonds issued in the Chinese Mainland carrying a 3 per cent annual coupon with annual interest payment. Contract size is RMB500,000, the two nearest quarter months are listed, and the minimum fluctuation is 0.005 per cent of contract size, equivalent to RMB25. Settlement is in cash for difference in Renminbi, and the contract has been designated a derivatives holiday trading contract.

The launch follows June's confirmation by the Securities and Futures Commission (SFC) of 3 August 2026 as the target date for the five-year tenor as the first CGB contract, with the product trading on HKEX's Hong Kong Futures Exchange. The instrument addresses a structural gap that has persisted since Bond Connect opened the onshore market to foreign capital in 2017: offshore holders of Chinese government bonds have until now had no listed futures contract in an internationally accessible venue through which to manage duration and interest-rate exposure, with onshore CGB futures confined to the China Financial Futures Exchange and accessible to overseas institutions only via the Qualified Foreign Investor route.

To support early volumes, the SFC Commission Levy will be exempted for the first six months of trading and a market-wide trading fee discount of 50 per cent will apply until 30 July 2027. Thirteen liquidity providers drawn from banks and securities firms are supporting the contract at launch.

The contract's pricing benchmark is supported by bond valuation data provider ChinaBond Pricing Center Co. Ltd., which licenses the data and provides price calculation services.

"A vibrant FIC market is critical to Hong Kong's future growth as an international financial centre. As global investors increase their participation in Asia's bond and RMB markets, Hong Kong has an important role to play as a trusted, open and connected hub that links China and the world. The launch of Five-Year China Government Bond Futures further strengthens Hong Kong's offshore RMB product suite, supports the continued internationalisation of the currency, and reinforces the city's position as a comprehensive platform for capital formation, trading and risk management." - HKEX Chairman, Carlson Tong

HKEX Chief Executive Officer, Bonnie Y Chan, said: "We are delighted to see the launch of Five-Year China Government Bond Futures today, marking a key milestone as HKEX delivers on its strategic imperative to develop a more diversified, multi-asset marketplace. From Bond Connect and Swap Connect to our growing derivatives, commodities and FIC offerings, we are creating a more integrated ecosystem that enables investors to allocate capital, manage risk and access new opportunities. Looking ahead, we will be working closely with regulators, infrastructure partners and market participants to expand connectivity, broaden product choice and strengthen risk-management capabilities across asset classes." - HKEX Chief Executive Officer, Bonnie Y Chan

HKEX held a launch ceremony at HKEX Connect Hall on Monday, attended by representatives from regulatory agencies, financial infrastructure institutions, market participants and industry stakeholders. Speaking at the ceremony, the Chairman of the China Securities Regulatory Commission (CSRC), Wu Qing, characterised the launch as a milestone for Hong Kong's role as a bridgehead and as the latest opening of the Mainland capital market to international investors. Wu also said regulators on both sides are preparing technical frameworks to allow Mainland investors to trade dual-currency counters and real estate investment trusts through Southbound Stock Connect. HKEX said it welcomed the measures announced by the CSRC Chairman to deepen cooperation and connectivity between the Chinese Mainland and Hong Kong financial markets, and to support the continued development of Hong Kong as an international financial centre.

The CSRC delegation's visit included a meeting on Sunday between Hong Kong's Chief Executive, John Lee, and Wu at Government House, also attended by Financial Secretary Paul Chan, Acting Secretary for Financial Services and the Treasury Joseph Chan, SFC Chairman Dr Kelvin Wong and SFC Chief Executive Officer Julia Leung.

Publicly traded exchange group HKEX operates equity, derivative, commodity and fixed income markets, and owns the London Metal Exchange. The contract sits alongside the Bond Connect and Swap Connect mutual market access programmes within the group's China-related product suite.

Found this interesting? Become a member of LiquidityFinder and get daily industry news direct to your inbox — join here.