--- title: Foreign Investors Holding RMB2 Trillion of Chinese Government Bonds Now Have an Offshore Hedge description: Foreign investors held about RMB2 trillion of Chinese government bonds at end May. HKEX began trading a five-year CGB futures contract on 3 August. author: Darie Nani (Editor-in-Chief) date: 2026-08-03T08:15:09.031Z updated: 2026-08-03T08:15:09.046Z canonical: https://www.sovereignmagazine.com/article/china-government-bond-futures-offshore-hedge-hong-kong image: https://cdn.nanimediahouse.com/hkex-china-bond-futures-92547.webp categories: Markets content_type: News region: Hong Kong publication: Sovereign Magazine schema_type: Article --- Foreign investors who hold Chinese government bonds have been able, since Monday, to hedge the interest-rate risk on them without going onshore. Hong Kong Exchanges and Clearing began trading a five-year China government bond futures contract on 3 August, two years and eight months after Hong Kong's Securities and Futures Commission said such a contract would be launched in the city. At the end of May 2026, foreign investors held about RMB2 trillion of Chinese government bonds, the SFC said in June when it [confirmed the launch date](https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/corporate-news/doc?refNo=26PR94). Their holdings across the wider China Interbank Bond Market, which covers all onshore bonds rather than government issuance alone, stood at around RMB3.2 trillion at the same date, against RMB0.8 trillion in June 2017, the year Bond Connect opened. When the SFC announced the plan in November 2023, it set out the reason plainly: the amount of China treasury bonds held by offshore investors had increased steadily since Bond Connect launched, and [the demand for related hedging tools had risen with it](https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=23PR136). HKEX was preparing for the launch then, including proposing amendments to its rules, and said it would announce the details and a date as soon as practicable. HKEX describes the contract as the only CGB futures contract available in the offshore market. ## Each Contract Covers RMB500,000 and Settles in Cash Each contract covers RMB500,000 of five-year China Government Bonds issued in the Chinese Mainland, carrying a 3% annual coupon paid annually. The minimum price movement is 0.005% of the contract size, or RMB25. Contracts run in the two nearest quarter months from the March, June, September and December cycle, and they settle in cash, for the difference in renminbi, rather than by delivery of bonds. HKEX has designated it a holiday trading contract, and it has no after-hours session. The pricing benchmark comes from ChinaBond Pricing Center, a wholly owned subsidiary of China Central Depository & Clearing Co. Hong Kong Futures Exchange, an HKEX subsidiary, licensed the centre's bond valuation data and price calculation services under an agreement reached on 3 July. ChinaBond's data is widely used by mainland institutions in trading, risk management and accounting. ## Two Fee Waivers Run Into 2027 The SFC Commission Levy is exempted for the first six months of trading. Separately, a market-wide trading fee discount of 50 per cent applies until 30 July 2027. Thirteen liquidity providers from banks and securities firms supported the contract at launch. > "The launch comes at a time when asset managers' demand for RMB-denominated fixed income assets has increased as part of their diversification strategy." > — Julia Leung, Chief Executive Officer, Securities and Futures Commission ## The Contract Sits Alongside Bond Connect and Swap Connect The contract joins HKEX's Mainland-related suite, which also includes Stock Connect, Bond Connect, Swap Connect and the MSCI China A50 Connect Index Futures contract. Bond Connect opened in 2017. Swap Connect launched in 2023, with northbound trading starting that May, and gives international investors access to the onshore renminbi interest rate swap market. The MSCI China A50 Connect Index Futures contract launched in October 2021. ## Two Regulators Share Supervision of the Contract The launch required the SFC's approval. The SFC and the China Securities Regulatory Commission have arrangements for cross-boundary derivatives that include sharing supervisory information and providing enforcement assistance. When it confirmed the date in June, the SFC thanked the Central Government, the People's Bank of China and the CSRC for their support. Wu Qing, the CSRC's chairman, spoke at the launch ceremony at HKEX Connect Hall on Monday and announced measures to deepen cooperation and connectivity between mainland and Hong Kong financial markets. Paul Chan, the HKSAR Financial Secretary, and Kelvin Wong, the SFC's chairman, also spoke. Carlson Tong, HKEX's chairman, said a vibrant fixed-income and currencies market "is critical to Hong Kong's future growth as an international financial centre". More on the contract is at [hkexgroup.com](https://www.hkexgroup.com). ## FAQ **Q: What is Bond Connect?** Bond Connect is the mutual market access programme, opened in 2017, through which international investors buy bonds in the Chinese Mainland. International investors' holdings in the China Interbank Bond Market have grown from RMB0.8 trillion in June 2017 to around RMB3.2 trillion at the end of May 2026. **Q: How is the five-year CGB futures contract settled?** It is cash settled. Buyers and sellers exchange the difference in renminbi rather than delivering the underlying bonds. **Q: Which bonds does the contract track?** Five-year China Government Bonds issued in the Chinese Mainland, carrying a 3% annual coupon with annual interest payment. Each contract covers RMB500,000. **Q: How does this contract differ from Swap Connect?** Swap Connect launched in 2023 and gives international investors access to the onshore renminbi interest rate swap market. The CGB futures contract is traded on HKEX in Hong Kong and settles in cash against five-year China Government Bonds.