(Yicai) July 8 -- The Cross-Border Interbank Payment System has signed an agreement with the Hong Kong Exchanges and Clearing for the bourse to become a direct participant of the Chinese payment system offering clearing and settlement services in yuan.

OTC Clearing Hong Kong, a subsidiary of HKEX, will apply to become a direct participant of the CIPS before the end of this year, the bourse announced yesterday, citing a deal it inked with the systems' operator on the same day. After obtaining the qualification, the unit will be able to directly conduct yuan fund settlement through the CIPS, boosting the efficiency of its cross-border yuan clearing and settlement services.

Through the partnership, HKEX customers will have the opportunity to use the CIPS network for yuan business processing, while global participants of the system can also make transactions on the Hong Kong financial market more securely and efficiently.

The HKEX and the CIPS will also jointly explore deepening cross-border yuan business cooperation and support the long-term development of Hong Kong's fixed income and currency ecosystem, the stock exchange noted.

The CIPS, a financial "bridge" connecting Chinese and overseas markets, has been connected to mainland financial market infrastructure, such as the China Foreign Exchange Trade System and Shanghai Clearing House, as well as Hong Kong financial market infrastructure, such as the Central Moneymarkets Unit‌. The latest alliance is another milestone in the interconnection between CIPS and the Hong Kong financial market.

The cooperation between the CIPS and the HKEX will be conducive to enriching the cross-border use scenarios of the yuan, continuously optimizing the development environment of the offshore yuan market, and injecting stronger impetus into the internationalization of the redback and the prosperity of the Hong Kong economy, industry experts told Yicai. It is also an important measure to support the city in consolidating and enhancing its position as an international financial hub, they noted.

The People's Bank of China launched CIPS for cross-border yuan transactions on Oct. 8, 2015. Its services include cross-border trade settlements, cross-border capital account settlements, and cross-border payment and settlement services for financial institutions and individuals, with more than 1,800 participants from six continents, reaching over 190 countries and regions.

Editors: Tang Shihua, Martin Kadiev