HKEx’s Subsidiary, OTC Clear Adds Citi as Inaugural Clearing Member from US

The move is important as it also garners an exemption from the US' derivatives clearing organizational requirements.

OTC Clearing Hong Kong Limited, a subsidiary of Hong Kong Exchanges and Clearing Limited (HKEx), has welcomed Citi as its newest clearing member from the United States.

HKEx helps provide a pantheon of clearing services for over-the-counter (OTC) derivatives trading in Hong Kong. Collectively, the stock exchange group is Asia’s third largest unit in terms of market capitalization behind the Tokyo Stock Exchange (TSX) and the Shanghai Stock Exchange.

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Furthermore, the move by Hong Kong Citi is HKEx’s first US incorporated member, which will help extend the lender’s influence. The move is important as it also garners an exemption from the US’s derivatives clearing organizational requirements.

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According to Calvin Tai, HKEx’s Head of Global Clearing, in a recent statement on the approval, “We are pleased to admit Citi as our first US Clearing Member following our receipt of No Action Relief from the US Commodity Futures Trading Commission (CFTC). We have submitted an application for exemption from the US’s derivatives clearing organisation requirements, which will allow OTC Clear to provide inter-dealer clearing services to US banks.

“The RMB derivatives market is becoming increasingly significant to global banks from the US and other countries, and OTC Clears fast-expanding clearing membership reflects that trend,” he reiterated.

“We are pleased to have become a clearing member of OTC Clear. The membership will reinforce our role to help entrench Hong Kong’s position as the premier offshore RMB centre and we look forward to further contribute to the development of the offshore RMB market here,” added Paulus Mok, Head of Markets and Securities Services for Greater China and Country Treasurer for Hong Kong at Citi.

Last month, HKEx made a similar move with another offshore entity, welcoming Standard Chartered Bank as its first clearing member from the United Kingdom. In back-to-back months, HKEx has secured the services of two leading lenders in some of the world’s paramount trading hubs.

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