HKEx expects to launch the RMB equity trading support facility (TSF) or yuan trading pool in October. The mechanism will enable investors to buy yuan-denominated securities in the secondary market with Hong Kong dollars if they have difficulty obtaining yuan.

By the end of August, 81 exchange participants and 10 custodian participants had signed up for the yuan liquidity pool facility. The size of the TSF is yet to be known, but the bourse said it expects the initial size to be "modest and correlated with the size of the RMB offerings that the TSF will support". Over time, it expects the liquidity pool to grow as the yuan deposit base expands and the offshore yuan equity market develops.

There were 550 billion yuan ($86 billion) sitting in the city's bank deposits by the end of June, up 76 percent from 315 billion yuan at the beginning of this year.

TSF was first unveiled when HKEx released 2010 financial results in March and was designed to support secondary trading in yuan stocks as it enables investors who don't have sufficient access to the mainland currency to buy yuan-traded shares with Hong Kong dollars.

(HK Edition 09/06/2011 page2)