As per Deutsche Bank’s CNH Market Monitor, new rules set by the Hong Kong Monetary Authority (HKMA) are expected to boost offshore renminbi, FinanceAsia reports. The modifications done to the net open position (NOP) rule will increase the capacity to which Hong Kong banks can expand their CNH FX derivatives businesses.
The new calculation of NOP will allow participating banks to run larger carry positions. Currently, offshore units seeking to offer direct renminbi trade settlement services for clients have to set up clearing accounts with Bank of China. The new regulations will help improve efficiency and lower the cost of renminbi clearing and risk management for participating banks.
Click here for the story from FinanceAsia.