Overseas Investors Successfully Conducted the First Batch of Cash Bond Trades using T+3 Settlement in China Inter-bank Bond Market
On August 23rd, overseas investors Nomura Singapore Limited, Sumitomo Mitsui Banking Corporation, etc., successfully conducted the first batch of cash bond trades using T+3 settlement in China Inter-bank Bond Market (CIBM) with domestic counterparties HSBC Bank (China) Company Limited, etc.
In response to competent authorities’ deployment of extending the settlement cycle for overseas investors to T+3, China Central Depository & Clearing Co., Ltd. (hereinafter referred to as “CCDC”) released a joint announcement together with China Foreign Exchange Trade System and Shanghai Clearing House on August 23rd, declaring that if overseas investors are involved in cash bond trade, pledged repo, buyout repo or bond lending in CIBM, they may choose T+3 settlement cycle.
On July 20th, 2019, the State Council’s Office of Financial Stability and Development Committee issued 11 specific measures to further opening up the financial industry in accordance with the principle of “acting faster rather than slower, and sooner rather than later”. Extending the settlement cycle to T+3 is a practical reflection of the foresaid 11 measures, facilitating overseas institutional investors to further participate in CIBM. It is also designed to address the potential need of some overseas investors for an extended settlement cycle after FTSE Russell include Chinese bonds in its global indices in the future, making it more convenient for them to track relevant indices and invest in Chinese bonds.
According to Liangdui XU, Vice President of CCDC, the launch of T+3 settlement cycle in CIBM for overseas investors is an active response to China’s signal of further opening up the financial industry and an effective measure to facilitate the investment in CIBM for the benefit of overseas investors. It will contribute to the incorporation of Chinese bonds into international indices such as FTSE Russell and the internationalization of China’s bond market. As the gateway of China’s bond market to the world, CCDC will stay committed to providing convenient, efficient and professional services for global investors to enter China’s bond market.