The market agency has taken this decision to assist investors and businesses in reducing the interest rate risk of their RMB business.
Planned CNH HIBOR fixing will include tenors from overnight to 12 months and will be calculated from rates contributed by 15 to 18 reference banks that are active in the RMB interbank market.
Currently, the TMA is already publishing the offered rates of 13 banks across these tenors on its website for the information of market participants.
The TMA said that the launch of the fixing will offer a formal benchmark for market participants to make reference to in pricing their RMB loan and interest rate contracts.
TMA executive board chairman and Hong Kong Monetary Authority deputy chief executive Peter Pang said, "The fixing will also spearhead the development of the offshore RMB interest rate swap market and assist market participants to hedge the interest rate risk of their RMB business."
It is believed that the recent decision will significantly contribute in the development of the offshore Yuan loan market and Yuan-denominated investment products including interest-rate swaps, options and other derivatives.
This will further spur growth in the region, and is believed to be a major development factor of the infrastructure of Hong Kong’s Yuan market.
Meanwhile, many international interbank rates including Libor are presently facing increased scrutiny owing to rising rate-fixing scandals throughout the world.
