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London Clearing House begins accepting dim sum bonds as yuan collateral

The change lets investors post offshore yuan Chinese government bonds to satisfy margin requirements at LCH, expanding access to yuan assets in Western clearing.

Reported · Written up by our desk · Trade & Tariffs

The London Clearing House has started accepting offshore yuan-denominated Chinese government bonds, known as dim sum bonds, as eligible non-cash collateral, a step viewed as part of Beijing’s effort to internationalise the yuan, according to SCMP Economy.

SCMP Economy reports that the LCH decision allows investors to use offshore yuan sovereign bonds to meet margin requirements, lowering prior frictions for foreign participation in yuan exposures through Western clearing infrastructure.

The move comes as demand for yuan assets grows alongside China’s expanding domestic bond market, described by SCMP Economy as the world’s second-largest and measured in multitrillions of dollars.

SCMP Economy added that foreign investors historically faced collateral rules that tended to favor US Treasuries and European bonds, limiting the usefulness of yuan assets in Western clearing houses.

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