China's bond market is in good shape again. On September 2, the people's Bank of China, the China Securities Regulatory Commission and the State Administration of Foreign Exchange jointly issued a document saying that in order to further strengthen the systematicness, integrity and coordination of China's bond market opening to the outside world and facilitate the allocation of RMB bond assets by overseas institutional investors, the three departments jointly drafted the "people's Bank of China and China Securities Regulatory Commission" Announcement of the State Administration of foreign exchange on issues concerning foreign institutional investors' investment in China's bond market (Draft for comments) (hereinafter referred to as the announcement).
The announcement aims to clarify the overall institutional arrangements for the opening up of China's bond market and further facilitate the allocation of RMB bond assets by foreign institutional investors.
The announcement makes clear that the scope of overseas institutions includes not only overseas central banks, monetary authorities, international financial organizations, sovereign wealth funds and other sovereign institutions, but also commercial institutions such as commercial banks, insurance companies, securities companies, fund management companies, futures companies, trust companies, asset management institutions and other commercial institutions established in accordance with the law outside China. The entry mode of overseas institutions is consistent with the current provisions, that is, sovereign institutions need to submit applications to the people's Bank of China, while commercial institutions need to submit applications to the Shanghai headquarters of the people's Bank of China. Overseas institutions will no longer submit applications in the name of products and do not need to enter the market one by one.
According to the people's Bank of China, the first is to adhere to the principle of rule of law. Adjust the access application of overseas institutions from products to managers and custodians. According to the basic idea that the legal entity is the main body of market activities and the object of supervision, we should consolidate the responsibilities and obligations of all parties and facilitate relevant operations.
Second, unified access management. In accordance with the principle of "one Chinese bond market with the same set of standards and rules", we should unify the access standards, optimize the market entry process, and encourage overseas institutions to invest in China's bond market as medium and long-term investors. Foreign institutional investors who have entered the inter-bank bond market can invest in the exchange bond market directly or through interconnection.
Third, unified fund management. We will unify the management of fund receipt and payment, exchange and foreign exchange risk of overseas institutions' investment in China's bond market, further optimize and facilitate the inward and outward remittance of investment funds, and improve the operation of capital exchange and foreign exchange risk management.
The fourth is to improve the operation arrangement in line with international standards. The Shanghai headquarters of the people's Bank of China no longer requires the submission of settlement agency agreement. Foreign institutions are allowed to invest in the market according to the mode of "global custody bank + local custody bank", and promote the implementation of nominal bond holding and multi-level custody system.
Fifthly, we should deepen cross sectoral regulatory cooperation. Insist on penetrating data and information collection. The people's Bank of China, the China Securities Regulatory Commission and the foreign exchange bureau form regulatory joint forces according to the division of responsibilities, and realize the exchange and sharing of information and data through the transaction reporting system, enhance the market transparency, and jointly maintain a good market environment.
Wu Yingmin, vice president of Hang Seng Bank (China) Co., Ltd. and head of global market business, told Shanghai Securities News that the announcement made clear the unified access management, optimized the market entry process, and further encouraged overseas institutions to invest in China's bond market as medium and long-term investors on the basis of the original measures of opening up the bond market, which not only facilitates the participation of overseas funds in China's bond market, but also facilitates the participation of overseas funds in China's bond market Fund raisers in the domestic bond market will provide more sources of funds to promote the opening and development of the financial market.
China's bond market has been favored by foreign investors for a long time.
According to the data of Bond Custody volume (by investors) released by China national debt agency yesterday, the denomination of bonds entrusted by overseas institutions in the month was 2461.955 billion yuan, an increase of 117.831 billion yuan compared with July, a year-on-year increase of 42.82%, and an increase of 31.17% compared with the end of last year. It is the 21st consecutive month for foreign institutional investors to increase their holdings of Chinese bonds.
According to the data recently disclosed by bond link Co., Ltd., the trading volume of bond link in August was 409.3 billion yuan, with 5086 transactions, with an average daily trading volume of 19.5 billion yuan. Among them, treasury bonds were actively traded in August, with a total turnover of 186.4 billion yuan, accounting for 46% of the monthly turnover, 12% higher than that in July.
Wang Zhiyuan, general manager of the financial market department of Fubang Huayi bank, said that the bottom source of foreign capital's continued increase in China's bonds is due to the effective prevention and control of China's epidemic situation, the widening interest rate gap between China and the United States, the increasing of China's financial opening policy and the improvement of global risk sentiment.
"Since this year, RMB bonds have become a favorite asset for global investors. It is expected that this trend will continue as China's economy stabilizes and the RMB continues to appreciate." Said Zhang Jinqiu, vice president of HSBC China and co director of global capital markets.