LCH Ltd (LCH) is making progress on preparations to offer clearing and settlement services for offshore renminbi (CNH) foreign-exchange products in Hong Kong, the global central counterparty told China Daily.
LCH said it plans to begin clearing for CNH FX options as early as the end of the second quarter in 2027, subject to legal and regulatory approval. Related products are expected to settle through Hong Kong’s market infrastructure during the city’s liquid funding hours, which would “help institutions manage counterparty and settlement risk more efficiently”.
“We're working closely with the regulatory authorities, the Hong Kong Monetary Authority and the likes, to launch with 10 participants – both international and regional banks – the clearing of FX options in US dollars and CNH,” said Daniel Maguire, chief executive officer of LCH Group and group head of LSEG Markets, in an exclusive interview.
“The USD/CNH pair in FX options is now the third most traded pair globally. It’s extraordinary growth, and we expect to see that continue,” he added.
USD/CNH FX options are derivative contracts that allow the holders to sell US dollars and buy offshore yuan, or vice versa, at the agreed-upon rate to hedge or take positions on currency movements.
Maguire said clearing services for other instruments such as FX swaps are also planned and could be introduced “very quickly thereafter”.
In response to a China Daily inquiry, the HKMA said it does not comment on individual companies’ affairs.
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“The HKMA has been pushing forward concrete initiatives to consolidate Hong Kong's roles as a premier international financial center and a leading offshore renminbi business hub, with a view to facilitating the wider adoption of renminbi globally,” a spokesperson said.
“We will continue to work closely with Chinese mainland authorities and industry participants from local and overseas markets to promote the offshore renminbi market and greater connectivity among global financial markets for renminbi businesses,” the spokesperson added.
The move is part of LCH's broader strategy to expand its services globally and build a more comprehensive infrastructure ecosystem, as investors increasingly turn to renminbi and related assets for portfolio diversification and risk management.
“LCH builds market infrastructure with a long-term view, guided by where market participants want to go. That means anticipating where demand may be five or 10 years from now,” Maguire said.
“We see significant potential for renminbi assets over that horizon, and the appetite already being seen from members reinforces that view.”
Market interest in using renminbi assets for liquidity has also increased in recent years, according to Maguire.
LCH began accepting RMB-denominated Chinese Government Bonds (CGBs) as eligible non-cash collateral in July, following the acceptance of USD- and EUR-denominated CGBs last year.
Maguire said this development has been well received among Chinese and international institutions, with six LCH members posting RMB-denominated CGBs across eight accounts on the first day and 11 participants posting collateral within the first two days.
LCH is also collaborating with Hong Kong market infrastructure providers to support the greater use of the bonds as collateral, he said, adding that it aims to have RMB-denominated CGBs used as collateral settled and held in the Central Moneymarkets Unit (CMU) system by 2027.
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CMU is a central securities depository for debt securities in the special administrative region, which is operated by CMU OmniClear Ltd on behalf of the HKMA.
In 2025, CMU OmniClear and LCH signed a memorandum of understanding, aiming to jointly support the development of clearing and settlement solutions for derivatives denominated in offshore renminbi and other currencies using Hong Kong’s market infrastructure.
Contact the writer at gabylin@chinadailyhk.com
