Offshore FIs More Hopeful of Access to China Bond Futures

A new pilot scheme to allow Chinese banks to trade government bond futures is a healthy step towards allowing foreign investors to finally tap it, experts believe.

Market observers are hopeful offshore financial institutions will soon be granted access to China’s bond futures market, a move that would see liquidity in the hemmed off market increase dramatically.

This expectation comes off the back of the Chinese government’s recent measure to further open up the country’s market for bond futures, which are contracts for future delivery of a bond instrument.

On February 21, the China Banking and Insurance Regulatory Commission (CBIRC), announced it would allow local insurers and banks to trade Chinese government bond futures. Initially, five Chinese state-owned banks will trade Chinese government bond futures on a trial basis, namely Bank of China, Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank, and Bank of Communications.

“International investors have been lobbying China’s regulators to liberalise bond futures trading for some time and it is clear [they] are listening. We believe this latest announcement is just the first step in the full opening of China’s bond futures markets to offshore entities,” Hayden Briscoe, head of fixed income at UBS Asset Management, told FinanceAsia.

Apart from this first batch of five Chinese state-owned banks, more banks and insurers will be soon allowed to trade Chinese … [read more]

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