The launch of Bond Connect is approaching its fifth anniversary.Pan Gongsheng, deputy governor of the People's Bank of China, recently wrote in "China Finance" that in the next stage, the People's Bank of China will continue to implement the requirements of serving the real economy, preventing and controlling financial risks, and deepening financial reforms in accordance with the deployment of the Party Central Committee and the State Council, and will work with various parties. We should work together to solidly promote the reform and opening up and high-quality development of China's bond market, and provide strong support for accelerating the construction of a modern economic system and a new development pattern.
The total size of my country's bond market ranks second in the world
With the deepening of reform and opening up, the development of my country's bond market focuses on absorbing international experience and combining national conditions, following the objective laws of market development, mainly targeting qualified institutional investors and relying on the over-the-counter market. The restraint mechanism has stimulated the vitality of the market itself, and achieved good development results.
Pan Gongsheng said that by the end of May 2022, the total size of my country's bond market reached 139 trillion yuan, an increase of 4.3 times compared with the end of 2012, ranking second in the world.Among them, the scale of corporate credit bonds is 32 trillion yuan, ranking second in the world, and it is the second largest financing channel for the real economy after credit.
As far as the opening of the bond market is concerned, Pan Gongsheng said that by the end of May 2022, there were 1,038 foreign institutions entering the inter-bank market, covering more than 60 foreign institutions including the United States, Canada, the United Kingdom, France, Germany, Italy, Japan, Singapore, and Australia. countries and regions.
At the same time, the influence of the bond market is also steadily increasing.Pan Gongsheng emphasized that although the volatility of the international financial market has increased recently due to various factors, my country's bond market and foreign exchange market have generally remained stable and have withstood a "stress test", which not only reflects China's status as a large open economy The size advantage in coping with external shocks also fully reflects the deepening of the market-oriented reform of interest rates and exchange rates, and the steady and prudent promotion of the opening up of the financial market, which has continuously enhanced the resilience of my country's financial system and helped boost foreign investors' interest in my country's financial market. Expand open confidence.
Regarding the specific measures for the next stage, Pan Gongsheng pointed out that the first is to build an efficient and connected multi-level market system and cultivate a diversified team of qualified investors.Accelerate the promotion of the orderly connection of bond market infrastructure and realize the free flow of factors.The second is to consolidate the legal basis of the bond market, strengthen supervision coordination, and strengthen risk prevention and control.Promote the improvement of the "Company Law", "Securities Law", "Enterprise Bankruptcy Law" and "People's Bank of China Law" and other laws to consolidate the foundation of higher laws.Research and formulate the "Corporate Bond Management Regulations", in accordance with the principle of classification and convergence, unify various systems and implementation standards, and clarify the issuance and transfer, information disclosure, investor protection, and legal responsibilities of non-publicly issued corporate credit bonds.The third is to continue to promote high-level financial opening to the outside world.
Provide a more convenient market environment for foreign investors
China Foreign Exchange Trade System and Bond Connect Company launched a number of measures on the 7th and 1st to provide a more convenient market environment for foreign investors.For example, the CFETS stated that it plans to further extend the trading hours of the inter-bank foreign exchange market in the near future.
In terms of the optimization of the closing price trading mechanism, in order to support the inclusion of Chinese government bonds in international bond indices and better meet the trading needs of foreign passive investors, the CFETS has continued to optimize related transactions and supporting services after launching the closing price trading mechanism in November last year. At the beginning of July, the update time of the closing price transaction was advanced to about 17:30, and in August, the closing price trading mechanism was extended to the international payment model.
In terms of cross-border subscription services for overseas institutions, the Exchange stated that, in order to facilitate foreign investors to invest in the inter-bank bond market and provide more efficient and safer bond primary market investment channels, under the guidance of the People's Bank of China, July 4, 2022 CFETS will cooperate with Bond Connect to launch the cross-border subscription business of inter-bank bonds for foreign investors and domestic underwriters.
The Exchange stated that it will continue to promote product and service innovation based on the overall situation of the two-way opening of the bond market in accordance with the deployment of the People's Bank of China, strengthen the efficient linkage of bond issuance and transactions, and provide higher-quality services for overseas institutions to invest in the inter-bank bond market.
In terms of reducing the cost of capital, in order to reduce the investment cost of foreign investors, Bond Connect said on July 1 that it will reduce the service fee for overseas electronic trading platforms from July 11, and the remaining term of the transaction target is less than or equal to one year. , the service fee is reduced from 0.0020% of the total face value to 0.0015%; if the remaining term of the transaction target is greater than one year, the service fee is reduced from 0.0040% of the total face value to 0.0030%.
Bond Connect said that the fee reduction this time has reached 25%, which will significantly reduce the investment cost of foreign investors.This is also the third time that Bond Connect has reduced service fees in the five years since Bond Connect has been in operation, reflecting Bond Connect's long-term and practical determination to create a favorable environment for overseas institutional investment.
(Editor in charge: Ma Xin)
