Custodian Banks are used by their customers for the safekeeping of proprietary and third-party interests in securities; the settlement and clearing of securities trades; ancillary services including corporate action processing; securities lending and collateral management.
The People’s Bank of China (PBoC) is likely to lift the RMB 20,000 daily limit on currency conversion for Hong Kong residents, according to the Hong Kong Monetary Authority’s chief executive Norman Chan. As we have long argued, the removal of the conversion cap is crucial to further facilitate the growth of the Hong Kong’s offshore RMB market (see “It’s time to review the personal conversion quota” 3 Apr 2012, and “How will HK maintain its RMB edge?” 25 Oct 2012).
Given that RMB is fungible offshore, the emergence of new offshore centres simply expands the existing regime instead of creating competing systems. As such, we do not expect the recent development to have much impact on Hong Kong; especially when the market is already relatively mature after eight years of development. Being an important entrepot of the mainland, Hong Kong is currently handling more than 80% of all RMB payments and receiving over 50% of all letters of credit sent by banks in China (Chart 1).