Hong Kong Exchanges and Clearing Limited (HKEx) and Singapore Exchange (SGX) have signed a memorandum of understanding to cooperate to promoting the internationalization of the Renminbi by exploring joint product development.

The cooperation underlines the growing importance of regional dialogue on topical issues and opportunities in an industry where rapid advancements in market technologies, the impact of supra-national regulations and the international evolution of the offshore Renminbi market are on the agenda for market operators, regulators and participants alike.

“This MOU allows us to build on Hong Kong’s position as the premier offshore Renminbi Centre by developing closer links with Singapore and helping regional investors deploy a growing pool of investable offshore Renminbi,” said HKEx chief executive Charles Li. “We are also very pleased to establish a framework for cooperation with SGX on global regulatory issues and technology development, two critical areas for exchanges.”

The companies also have agreed to enhance connectivity through points of presence in each other’s data centers, collaborate on technology development and regulatory issues, and to work closely in relation to extraterritorial market infrastructure regulation impacting the Asian region.

“Our collaboration with HKEx, through new products and services available on both exchanges, is yet another example how the Asian Gateway enables easier access to Chinese capital markets,” said SGX CEO Magnus Böcker. “By including regulatory collaboration in this partnership, we are paving the way for Asian markets to have a more prominent and unified voice regarding global developments and regulatory reforms.”

Separately, OTC Clearing Hong Kong Limited (OTC Clear), a subsidiary of Hong Kong Exchanges and Clearing Limited (HKEx), cleared its first OTC derivatives transaction using Calypso’s CCP OTC clearing solution when it commenced business November 25.

OTC Clear, whose 12 founding shareholders include five mainland Chinese banks, selected Calypso as the system to provide end-to-end OTC clearing, processing and risk management of interest rate swaps and FX non-deliverable currency forwards. OTC Clear is also the first clearing house to employ Calypso’s collateral management module to handle and process collateral with its clearing members.

The success of the recent go-live, where the first trade cleared was a non-deliverable Renminbi 7-day repo swap, highlights the evolving market structure of Hong Kong as a key financial center and will further leverage Hong Kong’s position as the premier offshore Renminbi center.

“In looking for a partner, we wanted a provider who had deep experience in implementing OTC clearing technology and who fully understood our business and our position as a financial hub for the Renminbi-denominated products in the OTC marketplace,” said Gerald Greiner, global head of clearing at HKEx.

“We are thrilled to be working with such an important organization in the Chinese and APAC marketplace,” said Charles Marston, chairman and CEO of Calypso. “Our work with HKEx reinforces our position as a leading technology provider for the global OTC markets. We look forward to the continued success of the partnership with HKEx and further establishing Calypso as the world’s trusted clearing solutions provider.”