CCDC President Chen Gangming Addressed 2020 Bond Market Development Forum
Dear leaders and guests,
Good morning, everyone! At this turn of year, we meet again to talk about the development of China’s bond market. After years of efforts, Bond Investment Strategy Forum has been upgraded to the Bond Market Development Forum. First of all, on behalf of CCDC, I would like to extend a warm welcome to the leaders, experts and friends for attending this meeting!
In 2019, under the guidance of the regulatory bodies and with the strong support of market institutions, CCDC has been focusing on its core financial infrastructure mandates, implementing national strategic deployment, enhancing service capabilities and making significant progress, which I would like to elaborate more here.
The first is to optimize policy support, strengthen innovations, and promote the supply-side structural reforms. To respond to the needs for high-quality development, CCDC launched Automatic Issuance Payment service to support the DVP settlement practice; it supports commercial banks to issue perpetual bonds to improve soundness of banking sector; it provides market making support for government bonds and policy bank financial bonds to ensure market liquidity; it keeps improving clearing channels and building an integrated settlement system compatible to local and foreign currencies; and it makes continuous efforts to polish customer service by revamping the front, middle, and back offices and improving the coordination between Beijing, Shanghai and Shenzhen offices.
CCDC is an important platform for the implementation of the country's macro-policy, and has been actively cooperating with financial, monetary and industrial governing bodies. For monetary policy, it has supported open market operations of more than 13 trillion yuan, supported the issuance of floating interest rate bonds based on LPR to promote the transmission of monetary policy, and supported the introduction of central bank CBS instruments to ensure commercial banks’ capitalization. For fiscal policy, it supported during 2019 the issuance of government bonds of approximately 8.4 trillion yuan, the issuance of Xiong'an New Area Bonds, the introduction of market-making buy operation of local government bond OTC business and savings bond business, and the central and local government treasury cash management operations of 6.8 trillion yuan. For industrial policy, it supported the revision of enterprise bond-related business guidelines, carries out enterprise bond assessments, advocates financing policies for good-quality enterprises, and supported issuance of all kinds of corporate bonds of approximately 360 billion yuan. It keeps improving the registration system for government-sponsored investment funds with a target volume of 4.8 trillion yuan.
The second is to strengthen risk management capabilities and ensure the stable operation of financial markets. As a core national financial infrastructure, CCDC supported bond issuance and registration of more than 15 trillion yuan, with total bond under its depository 65 trillion yuan, and concluded settlement of nearly 1,500 trillion yuan. Focusing on the modernization of China’s financial infrastructure in the new era, the company has been working all out on high-standard new-generation core business operating systems and building high-level data centers in Beijing and Shanghai, so as to create a multi-center integrated operation and maintenance system. At present, these projects are in concluding stage and the new generation systems and Beijing and Shanghai data centers are scheduled to be operational this year.
CCDC has been continuously strengthening risk management capacity building in China’s bond market and providing consultancy on deleveraging, financial risk prevention and asset management transformation based on regulatory requirements and policy concerns. The company keeps improving the bond market risk monitoring system and has developed a series of benchmark indicators covering repo business, bond market stability and financial conditions. CCDC keeps supporting the prevention and mitigation of major financial risks, assisted the resolution of risk events such as Baoshang Bank fraud, and improves the internal warning model for settlement and bond redemption. CCDC issues bond market analysis reports and risk monitoring reports, and supports the comprehensive financial statistics and balance of payments statistics compilation. The company are also responsible for the building of enterprise bond credit information database and national enterprise bond risk monitoring system. ChinaBond market implied rating serves as a widely accepted dynamic risk warning indicator for the market.
The company is the world's largest bond collateral manager. It has established a fast collateral disposal mechanism, and has been continuously expanding the collateral management parameters, introducing numerous innovative services to interbank credit, insurance asset management, government-sponsored funds, poverty alleviation re-loans and social security fund operation. The company also actively exerts its regulatory supporting functions and continuously optimizes centralized registration of financial assets such as credit assets, wealth management products and trust schemes. At present, the registered financial assets with CCDC amounts to nearly 50 trillion yuan.
The third is to further enhance the interconnection and promote bond market opening up. CCDC vigorously promotes the interconnection among bond markets, supports the cross-market issuance of railway construction bonds, advocates for enterprise bond electronic custody transfer business, provides solutions for business innovations such as cross-market bond ETFs, and gives recommendations for cross-market inter-connection of bond operation. CCDC also deepens the interconnection between the bond and derivatives markets, and has been working with all domestic futures exchanges to fully introduce the bond margin business into the futures market.
China's bond market has entered a new stage of opening up. CCDC provides all-channel support to overseas institutions participating China bond market through “global connect”, the Hong Kong “Bond Connect” and the Macau MOX, via a well-recognized ChinaBond service model and account system compatible with both international practices and Chinese formalities. As of the end of 2019, CCDC has served more than 1,100 foreign institutional investors, with a total holding of 1.88 trillion yuan by foreign institutions, accounting for nearly 90% of the total foreign investors’ bond holdings in China. The company has been researching the development of the bond market in the free trade zones and supporting the cross-border issuance of green corporate bonds. It has established a UK representative office with the China Banking Association to further extend its services abroad. It contributed to the inclusion of RMB bonds in the qualified collateral pool of the international market. It is promoting the global use of ChinaBond pricing products including ChinaBond valuations and indices, with the first green bond-included ChinaBond index ETF fund listed on Taiwan Stock Exchange and the "ChinaBond-ICBC RMB Bond Index" listed on Singapore Exchange. Through the efforts of all parties, the international traction of China's bond market has been increased significantly.
Dear guests and friends, 2020 is the concluding year for building a well-off society and completing the Thirteenth Five-Year Plan. CCDC will firmly take Xi Jinping's ideas of socialism with Chinese characteristics in the new era as the guidance, fully implement the spirit of the 19th CPC National Congress and the Central Economic Work Conference, keep in mind its original aspiration and mission, and contribute to the quality development of the China’s bond market.
First, we shall promote the steady development of the market and assist in winning the battle against financial risks. CCDC will adhere to the laws of the market and ensure the stability of financial infrastructure. We need to make every effort to complete the new-generation systems and new data centers to further modernize financial infrastructure. We need to closely monitor the fluctuations in the prices of government bonds, optimize local government debt management services, improve bond data management, improve financial asset registration and exchange services, research on new performance evaluation systems for industrial funds, and enhance the function of national enterprise debt risk monitoring systems. We need to continue to improve the level of risk management, promote the full implementation of the tri-party repo business and the introduction of centralized bond lending business. We need to further strengthen data service capabilities and promote the development of ChinaBond think tank to provide high-level policy advices.
Second, we shall promote the innovative development of the bond market and fully implement the new concept of customer service. The company will continue to focus on customer services and provide supportive contribution in macro-policy operations, information services and research, sticking to the idea of “integrated service system, one-stop service and all-around solution”. We need to vigorously support bond finance of well-performed business, promote the development of innovative financial products such as green bonds, asset securitization and perpetual bonds, and help increase the proportion of direct financing in China. We need to strengthen the innovative initiatives such as remote issuance, flexible bidding, OTC issuance of local government bond and DVP mode of issuance payment. We need to strengthen customer communication and foster an innovative cooperation pattern featured by coordinated centralized registration, multi-tier service, platform guidance and win-win potential.
Third, we shall promote the opening up of the bond market and upgrade ChinaBond international services. With the aim of building a world-class financial infrastructure that is compatible with China's economic status and the size of the domestic market, CCDC will adapt to the new opportunity, enrich international service content, pushing forward the construction of information platforms, and optimize the bond services, collateral services and pricing products that meet the needs of cross-border transactions. CCDC will promote cross-border interconnection under the guidance of regulatory bodies, and serve as the major pillar and channel in the opening up of the bond market.
Dear guests and friends, to achieve self-improvement and support high-quality economic growth remains as the top priority of China's bond market. Facing the complicated and ever-changing international political and economic situation and the arduous task of reform and development, we should brainstorm ideas, meet challenges, and join our efforts to make contributions to the reform and development of China's bond market.
To conclude my speech, I wish this forum a complete success! And I also take this opportunity to wish everyone a happy spring festival. May good health, smooth career and happy family always be with you! Thank you.