CCDC President Chen Gangming Addressed “2017 Bond Market Investment Strategy Forum ”
Dear Ladies and Gentlemen,
Good morning! There is an old Chinese saying that goes, at the beginning of the year, everything takes on a fresh and new look. As we all gather here at this year’s forum, on behalf of CCDC, I would like to extend to you, distinguished leaders and guests, our warmest welcome! 2016 marked the opening year of China’s “13th Five-Year Plan”, and, indeed, it turned out to be an extraordinary year for China’s bond market. During the past year, under the direction of supervisory authorities, bearing in mind the new concept of development, CCDC as a core FMI of China effectively supported and provided quality service to the market. It is our staff’s hard working that make possible various achievements of this year, which also present a remarkable tribute to CCDC’s 20th anniversary, and which I would like to share with you today.
1) CCDC actively supports the innovation-driven market development. In 2016, bearing in mind the needs of national strategy, CCDC outlined its new development road map, which guides the company’s efforts in supporting the continued growth of the market and the implementation of the relevant innovations. In 2016, the total value of bond issuance that CCDC supported exceeded 14 trillion yuan, registering a historical high and representing a yoy increase of 40%; the total value of bond under CCDC depository amounted to nearly 44 trillion yuan, accounting for 78% of the total bond market; the total settlement volume through CCDC exceeded 1000 trillion yuan for the first time, accounting for 80% of inter-bank market. During this year CCDC has been upgrading its core services: the company is constructing a new generation of comprehensive issuance service platform, strengthening the synergy effect of Beijing, Shanghai and Shenzhen offices, and facilitating product and service innovation; it explores ways to materialize a unified registration and depository system for various products across multiple markets, as well as a multi-currency and multi-channel DVP settlement arrangement. CCDC has been innovating its risk management services: in accordance with the instructions of the Central Leading Group For Comprehensive Deepening Reform, and under the guidance of the directing authorities, CCDC keeps improving its bond market price monitoring capacity; advocating market implied rating methodology; strengthening its field monitoring role in the markets; expanding the scope of the collateral services---- the total value of collateral under CCDC’s management has exceeded 12 trillion yuan, ranking first in the world. In addition, the company also actively promotes the innovation of the market mechanism, applies the good practice such as pre-issuance and government bond market making, pushes forward the preparation of three-party repurchase contracts and the central lending facilities, and accelerates construction of the think tank specialized in bond study.
2) CCDC actively supports macro-control policy coordination. The company provides service supporting the issuance of treasury bonds and local government bonds, and to this end, it keeps pushing forward system construction, service optimization and specialized research. During last year, the total value of treasury bond issuance amounted to 2.75 trillion yuan, the issuance of local government bonds reached 6.04 trillion yuan, and the total amount of treasury cash management for central and local governments amounted to 2.2 trillion yuan. CCDC coordinates with monetary authorities to carry out the flexible high-frequency monetary operations, and the relevant settlement amount in 2016 stands at 6.65 times of 2015. CCDC also managed to electronize all the operations of standby lending facilities and other innovative policy tools. In addition, the company continued to improve the enterprise bond evaluation system, to contribute to the bond credit system construction, to foster credit bond innovation, and to promote the effective implementation of industrial policies.
3) CCDC actively participates in the development of green finance. 2016 is the first year of the development of China's “green bond market”. The company actively implemented the concept of green development, and vigorously participated in the construction of the green bond market. Green bonds worth 172.1 billion yuan have been issued through CCDC for the whole year, accounting for 86% of the national issuance. To support the green bond innovation, CCDC contributed much to the design of the first green financial bonds with New Development Bank, and to the issuance of the first foreign “Green Covered Bond” of BOC. CCDC has been promoting the green financial infrastructure construction, for instance, by exploring a set of green bond recognition classification criteria, and by publishing the first domestic green bond index and the world's first climate related bond index in cooperation with relevant professional organizations. CCDC has joined the Green Financial Specialized Committee as a board member; participated in the research of carbon finance infrastructure arrangements; and successfully hosted the “10th Financial Street Forum” themed “The Analysis of the Green Bond Chain”.
4) CCDC actively supports the opening up of China’s bond market. The year 2016 witnessed a steady progress of inter-bank bond market opening up, with the scope of qualified foreign investors further expanding to now include 411 institutions. The bonds they are holding continued to grow, 90% of which, with total value $7.788 billion yuan, are currently under depository of CCDC. In line with the opening up deployment of the bond market, CCDC keeps strengthening its global capability, including developing international client system, translating website contents, releasing “Overview of China’s Bond Market”, and holding annual meeting of foreign investors and organizing outreaches for cross-border business promotion. In accordance with the work arrangements of directing authorities, CCDC participates in the design of Version 2.0 of the opening up of bond market; supports the construction of pilot FTA zone by issuing guidelines on FTA zone bond business and accommodating the issuance of the first FTA Zone Bond by Shanghai municipal government; steadily promotes the connection and integration of RMB cross-border payment systems; encourages cross-border collateral business innovation, including by promoting the implementation of Shanghai Gold Exchange’s “bonds for margin” business for global members, providing collateral management service for cross-border currency swaps, and providing collateral management and delivery agent services for foreign issuance of asset-backed bonds. In addition, CCDC also kept strengthening communications with foreign institutions, worked hard to fulfill the "The Belt and Road" initiative, successfully held the first international conference on Asian valuation, and has signed a memorandum of cooperation with China Europe International Exchange (CEINEX).
5) CCDC actively advocates inclusive development. In 2016, the company continued to support the development of inclusive finance by enriching financial service channels and medias. The “CCDC Jinlian System” was further fine tuned to better service hundreds of small financial institutions in 23 provinces and cities, and its mobile client platform, the first in China, was launched in 2016 to further improve the fund management of small and medium-sized financial institutions. To foster the development of the retail bond market, CCDC completed the revamp of its savings bond system and the technical preparation for local government bond OTC transaction. Under the guidance of the directing authorities, the company keeps improving its registration of wealth management and trust products, and strives to build a transparent, safe and convenient financial asset infrastructure platform that better serves its investors. In addition, keeping firmly in mind the social responsibility of the financial SOEs, CCDC actively participates in targeted poverty alleviation, including by teaching know-how and through better use of IT system services.
Dear guests and friends, 2017 is a year for deepening structural reforms on supply side, which means the reform and opening up of financial market has entered a new stage. As a core part of the national financial infrastructure, CCDC will continue to promote the steady and healthy development of bond market by providing better infrastructure services.
1) Enhancing our capability to support the integration of bond market. Based on the agenda set in the "13th Five-Year Plan” for important financial infrastructures, CCDC will continue to contribute to China’s financial system reform by further promoting the integration of the bond market infrastructures. Each major fluctuations in the bond market has highlighted the necessity and importance of a centralized depository institution. An efficient and highly integrated bond depository and settlement system can provide a solid support to ensure the smooth operation and the overall development of the market.
2) Fostering the sense of creativeness to encourage reform and innovations in bond market. In 2017, the bond market is expected to give more support to China’s structural reforms, and to enhance its risk management framework. In light of this objective, CCDC will continue to explore the issuance innovation options to better meet the financing needs in the market; actively support the launch of the three-party repurchase contracts and the central lending facilities to reduce liquidity risk; optimize risk management services, promote the collateral management application and enhance the decision-making supportive function of CCDC’s information services; and further augment the research and development services, especially the studies on some hot issues and problems, so as to give input to the industrial challenge of how to"improve quality while preserving quantity".
3) Making concerted efforts to support a well-ordered opening up of the bond market. Under the guidance of the governing authorities, CCDC will closely keep up with the pace of the bond market opening up on the following fronts: creating new channels of cross-border services and promoting 2.0 version of the bond market opening up; enhancing integration of cross-border payment and settlement and promoting the mutual recognition of and the cooperation on cross-border collateral; supporting the FTA Zone bond business and exploring ways of offshore RMB bond valuation; strengthening the oversea outreach engagement of China’s bond market. By doing so, CCDC aims to help materialize a deep and high-level opening up of China’s bond market, and give a strong impetus to the internationalization of the RMB.
Dear guests and friends! There is another old Chinese saying: only those who have no fear of hardships can navigate through dangerous water. As we all know, the further development of China's bond market requires concerted efforts from all parties. And I sincerely wish we all enjoy the following discussions on this forum, and I hope everyone can work together to realize our vision of future bond market. Finally, please let me take this opportunity to wish you a happy new year, and may health, success and good lucks be with you! Thank you!