CHINA: People`s Bank of China issues Notice further opening interbank bond market for foreign investors

Monday July 20 2015

On 14 July 2015, the People’s Bank of China (PBC) issued a Notice concerning relevant foreign investors interested in the interbank market.

The salient points of this Notice are:

• Foreign central banks or monetary authorities, international financial institutions and sovereign wealth funds can now access China’s interbank bond market after registration with the central bank in China;

• After registration, the relevant overseas institutional investors are able to begin trading cash bonds, repurchase agreements (repo), bond lending, bond forwards, interest rate swaps, forward rate agreements and other transactions permitted by the PBC. The foreign institutional investor is allowed to choose regarding the size of their investments;

• These relevant overseas institutional investors shall act as long-term investors, and conduct trading based on reasonable needs for preserving or increasing the value of their assets. The PBC are to regulate the behaviour of the relevant investors;

• Relevant investors shall trust the PBC or other specially entrusted settlement agents to exercise trading and settlement on their behalf.

This further opening of the interbank bond market is implemented in line with the relevant provisions of the Administrative Measure on Bond Trading in the Interbank Bond Market (PBC Decree [2000] and the Administrative Measures on Bond Registration, Depositary and Settlement in the Interbank Bond Market [2009]. This Notice came into effect on the date of its release.

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