"Northbound Link" means that overseas investors from Hong Kong and other countries and regions invest in the mainland inter-bank bond market through the mechanism arrangement of interconnection between Hong Kong and mainland infrastructure institutions in terms of transactions, custody and settlement.
According to the joint announcement, at present, the relevant laws and regulations, business rules, operation plans and supervision arrangements of "Northbound Communication" have been determined, the technical system is ready, and the market promotion and market entry preparations are being actively carried out.
The joint announcement pointed out that the People's Bank of China and the Hong Kong Monetary Authority reached a consensus on the principles of cross-border regulatory cooperation involved in the "bond link" and signed a memorandum of understanding to strengthen regulatory cooperation. The two sides agreed to establish an effective mechanism for information exchange and assistance in implementation according to the laws of the two places and their respective legal authorities, strengthen supervision and cooperation, jointly crack down on cross-border illegal activities and ensure the effective operation of the project.
The Joint Announcement requires that the infrastructure institutions of the two places should perform the duties of "bond link" according to law, organize all parties in the market to carry out the "bond link" business in an orderly manner, and assist the "northbound link" investors to fully understand the laws, regulations and business rules of the mainland bond market, carefully assess investment risks, and make full preparations for entering the national inter-bank bond market.
On May 16, the People's Bank of China and the Hong Kong Monetary Authority issued a joint announcement and decided to agree to launch the "Bond Link". Initially, "northbound communication" will be opened, and in the future, the research will be extended to "southbound communication" (domestic investors will invest in the Hong Kong bond market through the interconnection mechanism of infrastructure institutions in the two places).