CHINA: Shenzhen Stock Exchange Officially Releases Bond Pledge-style Triparty Repo Business

Wednesday July 18 2018

The Shenzhen Stock Exchange (SZSE) and China Securities Depository and Clearing (CSDC) have now officially released measures for a Bond Pledge-style Tri-party Repo Transactions and Settlement. These measures were introduced largely to improve the mechanism for repo transactions and other relevant services to market members.

In the interim SZSE have also released Guidelines on these measures to provide assistance to members participating in tri-party repo transactions. While the tri-party repo business pays a significant accompaniment towards the current bond repo business, it’s scope of collaterals is much broader in that it includes private placement bonds and asset-backed securities. Additionally tri-party repo offers a series of collateral management services such as daily market supervision, pledged bond selection, pledged bond basket management and settlement. The release of tri-party repo shall further increase the liquidity of the SZSE bond market, facilitate liquidity management for market institutions and perfect the basis for bond repo transactions.