The institutional opening of China's bond market has once again taken an important step.The People's Bank of China, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange recently issued Joint Announcement [2022] No. 4 (On Further Facilitating Foreign Institutional Investors Investing in China's Bond Market) (hereinafter referred to as the "Announcement"), coordinating and synchronizing the promotion of inter-bank and exchange bonds The market is open to the outside world.According to the "Announcement", the scope of foreign institutional investors admitted to the market has not changed, while the procedures have been further simplified, and the scope of investment has also been extended to the exchange bond market.
Industry insiders said that the release of the "Announcement" reflects the principle of "one set of institutional rules, one bond market", which can further facilitate foreign institutional investors to invest in China's bond market and unify the cross-border management of funds.At the same time, it will improve the liquidity and stability of the bond market, which will help expand capital account inflows, better promote the balance of payments, and enhance the financial system's ability to deal with complex international situations.
In fact, in recent years, China's bond market has made positive progress in opening up to the outside world. Various policy arrangements for foreign institutions to invest in China's bond market through direct access to the market have been continuously improved.On this basis, and under the current institutional framework, the "Announcement" further strengthens the systematic, holistic and synergistic opening of my country's bond market to the outside world.
Specifically, the first is to insist on taking legal person institutions as market entities and supervision objects, clarifying the rights and responsibilities of all parties, and supporting foreign institutional investors to invest in the exchange bond market directly or through interconnection and to choose trading venues independently.Second, based on years of good practices in my country's commercial bank counters, cross-market transfer custody, and "Bond Connect" business, adhere to penetrating data and information collection, and explore the establishment and improvement of inclusive institutional arrangements compatible with multi-level custody.Foreign institutional investors investing in the inter-bank bond market can independently choose a bond registration and settlement institution or a domestic custodian bank to provide bond custody services according to their actual needs.
"The scope of foreign institutional investors allowed to enter the market has not changed, the procedures have been further simplified, and the scope of investment can be extended to the exchange bond market." The relevant person in charge of the People's Bank of China said in response to a reporter's question.In terms of market entry procedures, foreign institutional investors enter the market as legal persons.For the newly added products of the institutions to be filed and those that have already filed, there is no need to record each product one by one.For products that have been filed, the existing bond account can be retained in the inter-bank bond market, or it can be merged into the legal person level, and the relevant financial infrastructure should provide non-transaction transfer services.Foreign institutional investors entering the market can directly invest in the exchange bond market after applying for the opening of a securities account with relevant filing certificates and other materials. Invest in the exchange bond market in an interoperable way.Both methods do not require separate filing or approval procedures.
According to data from the People's Bank of China, as of the end of April 2022, the balance of China's bond market was 138.2 trillion yuan, ranking second in the world since 2016. A total of 1,035 foreign institutional investors have entered China's bond market, with a total debt holding scale. 3.9 trillion yuan, an increase of 225% from the end of 2017.At the same time, Bloomberg, JPMorgan Chase and FTSE Russell, three international bond index providers, have included Chinese bonds in their major bond indexes, fully reflecting the confidence of international investors in the long-term healthy development of China's economy and the continued expansion of financial opening up.Industry insiders said that with the further opening of the bond market, more overseas incremental funds will enter the Chinese market.
In the next stage, the three departments will continue to follow the unified deployment of the Party Central Committee and the State Council, adhere to the overall national security concept, continue to optimize various institutional arrangements, improve risk prevention mechanisms, provide domestic and foreign investors with a more friendly and convenient investment environment, and support the construction of A high-level financial opening pattern that meets the requirements of high-quality development will improve the international competitiveness of the financial market.
Reported by reporter Zhang Mo in Beijing
