Beijing Unveils Measures for Further Opening of Chinese Bond Market

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China’s top financial regulators have flagged further measures to open up the domestic bond market.

The People’s Bank of China (PBOC), China Securities Regulatory Commission (CSRC) and the State Administration of Foreign Exchange (SAFE) have just issued the draft version of the “PBOC, CSRC and SAFE Public Announcement Concerning Arrangements in Relation to Offshore Institutional Investors Investing in the Chinese Bond Market” (中国人民银行中国证监会国家外汇管理局关于境外机构投资者投资中国债券市场有关事宜的公告(征求意见稿)).

The Announcement calls for “further strengthening the systemic, integrated and coordinated nature of external opening of the Chinese bond market, and facilitation of offshore institutional investors making allocations to renminbi bond assets.”

Measures outlined by the Announcement include:

  1. Upholding the principal of the rule of law.
  2. Unifying entry regulations, optimising market entry procedures, and encouraging offshore institutional investor to invest in China’s bond market as medium and long-term investors. Institutional investors that have already entered the interbank bond market can invest in the exchange bond market either directly or via connect initiatives.
  3. Unified funds regulation. Unification of the regulation of funds acceptance and payment, forex exchange and forex risk for offshore institutional investors investing in the Chinese bond market, and further optimisation of funds remittance and forex risk operations.
  4. Improving arrangements for connecting to international norms. Simplifying the market entry procedures for existing settlement agency models. The Shanghai head office will no longer require the submission of settlement agency agreements, and permit entry into the market and investment by offshore institutional investors via the “global custodian bank + local custodian bank” model.
  5. Deepen cross-departmental regulatory cooperation. Maintain comprehensive data and information gathering. PBOC, CSRC and SAFE will form a combined regulatory force accordance with a division of labour for professional duties.

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