PBOC Calls for Further Opening of Chinese Bond Market to Foreign Institutional Investors

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On 18 November the People’s Bank of China (PBOC) and the State Administration of Foreign Exchange (SAFE) jointly issued the “Regulations on the Administration of Funds Invested by Offshore Institutional Investors in the Chinese Bond Market (境外机构投资者投资中国债券市场资金管理规定).

According to PBOC, the Regulations will “improve and confirm the funds administration requirements for foreign institutional investors investing in the Chinese bond market and drive further opening of the Chinese bond market.”

“The unveiling of the regulations is of benefit to further improving the convenience for offshore institutional investors to invest in the Chinese bond market and strengthening the appeal of the Chinese bond market to offshore institutional investors,” a PBOC official said.

Key provisions of the new regulations, which are scheduled to come into effect on 1 January 2023, include:

  • Unifying and standardising the administrative regulations for the fund accounts, fund receipts and payments, exchange and statistical monitoring in relation to offshore institutional investors investing in the Chinese bond market.
  • Improvements to spot foreign exchange settlement and sales management.
  • Allowing offshore institutional investors to use third-party financial institutions outside of settlement agents for handling.
  • Improvements to forex risk management policies.
  • Further expanding channels for offshore institutional investors to engage in foreign exchange hedging.
  • Cancelling restrictions on the counter-party numbers for counter transactions.