This report analyzes interest rate derivatives (IRD) activity in mainland China and Hong Kong, with a particular focus on renminbi (RMB)-denominated IRD. It examines market growth, structure and integration across onshore and offshore centers, and places these developments within the broader context of China’s expanding role in global IRD markets.

Mainland China’s RMB IRD market (CNY swaps) has expanded significantly since 2022, supported by key structural reforms and improved cross-border access. Semiannual traded notional reported by the China Foreign Exchange Trade System (CFETS) rose by 122.3% to $2.9 trillion in the first half of 2025 from $1.3 trillion in the first half of 2022, driven by implementation of the Futures and Derivatives Law (FDL) and the introduction of Swap Connect. The FDL’s recognition of close-out netting encouraged institutional participation, while Swap Connect enabled offshore investors to access onshore RMB swaps.

Mainland China’s IRD activity remains heavily concentrated in short-tenor instruments, and nearly all onshore swaps reference the seven-day repo fixing rate (FR007), reflecting its role as the benchmark for interbank liquidity and monetary policy transmission.

Based on the 2025 BIS Triennial Survey, RMB-denominated contracts accounted for 87.9% of IRD average daily turnover in mainland China in April 2025, highlighting the market’s domestic focus. Cross-currency activity remains limited outside of US-dollar-denominated activity. Consistent with this structure, 81.5% of turnover involved local counterparties.

In Hong Kong, RMB-denominated IRD turnover (comprising CNH deliverable swaps and CNY non-deliverable swaps) also rose. The BIS Triennial Survey reported a 66.7% increase in average daily RMB-denominated IRD turnover to $24.5 billion in April 2025 from $14.7 billion in April 2022.

Data from the Hong Kong Trade Repository (HKTR) showed more pronounced growth – a 135.0% rise in average daily RMB-denominated IRD turnover in April 2025 to $70.0 billion versus $29.8 billion in April 2024. While methodological differences between the BIS and HKTR explain the gap in growth, both sources confirm robust and consistent expansion in Hong Kong RMB IRD activity.

Global RMB IRD average daily turnover grew by 81.9% to $63.2 billion in April 2025 compared to $34.7 billion in April 2022. Mainland China and Hong Kong together accounted for more than 70% of global RMB-denominated IRD activity, underscoring deepening onshore-offshore integration and Hong Kong’s continued role as the leading offshore hub connecting global investors with China’s IRD market.

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