The new CNH Hong Kong Interbank Offered Rate fixing (CNH HIBOR fixing) went live on 24 June. The Hong Kong Monetary Authority (HKMA) interbank reference rate for the offshore yuan market, is a long-awaited move that aims to help create more hedging options for those investing or trading in the Chinese currency.

The Hong Kong Monetary Authority (HKMA) has selected sixteen banks for contribution of interest rate quotes based on their activity levels in Hong Kong's offshore RMB market, and the TMA has appointed these banks as Contributing Banks for a term of one year:

• Agricultural Bank of China Limited
• Bank of China (Hong Kong) Limited
• Bank of Communications Co., Ltd.
• Bank of East Asia, Limited
• Bank of Tokyo-Mitsubishi UFJ, Ltd.
• China CITIC Bank International Limited
• China Construction Bank Corporation
• China Development Bank Corporation, Hong Kong Branch
• Citibank, N.A.
• DBS Bank Ltd., Hong Kong Branch
• Hang Seng Bank Limited
• Hongkong and Shanghai Banking Corporation Limited
• Industrial and Commercial Bank of China (Asia) Limited
• JPMorgan Chase Bank, National Association
• Oversea-Chinese Banking Corporation Limited
• Standard Chartered Bank (Hong Kong) Limited

Thomson Reuters has been designated as the Calculating Agent for the computation and dissemination of the CNH HIBOR fixing.

The yuan-denominated debt or so-called 'dim sum' bond market has grown rapidly in recent months in response to growing demand from investors seeking yuan assets. Market players have resorted to using imperfect derivatives to hedge their interest rate risk such as non-deliverable forwards and currency swaps.

For each of the eight tenors covered, namely overnight, one week, two weeks, one month, two months, three months, six months and 12 months, the fixing will be calculated by averaging the middle quotes after excluding the highest three quotes and lowest three quotes provided by the 16 contributing banks, which include Agricultural Bank of China, Bank of China (Hong Kong) and Bank of Communications.

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But limited liquidity will impact the ability to produce hedging products on the back of it, according to experts.