CCDC Held the 14th Meeting of ChinaBond Index Expert Steering Committee
The 14th meeting of the ChinaBond Index Expert Steering Committee of CCDC was held in Beijing on April 14, 2018. Yi Gang, Governor of the People's Bank of China attended the meeting and gave important instructions on how to advance the reform and opening up of the financial market, further promote the market-oriented reform of interest rates, and prevent and resolve major financial risks.
Li Yang, Chairman of the National Institution of Finance and Development, and Zhang Xiaohui, former Assistant Governor of the People's Bank of China, attended the meeting. More than 40 experts from the People's Bank of China, Ministry of Finance, China Banking and Insurance Regulatory Commission, National Development and Reform Commission, National Bureau of Statistics, State Administration of Taxation, Shanghai Financial Service Office, domestic and overseas industry associations, policy banks and other financial institutions, as well as intermediary service agencies, Tsinghua University and Renmin University attended the meeting. Shui Ruqing, Chairman of CCDC, called this meeting. Chen Gangming, President of CCDC, delivered an opening speech. Bai Weiqun, Supervisor of CCDC and Chairman of ChinaBond Pricing Center Co., Ltd., presided over the meeting.
In his speech, Chen Gangming stated that under the leadership and support of the competent authorities, CCDC fulfilled its mandates as a national financial infrastructure. In 2017, in terms of market service, the corporate bond registration and depository under CCDC reached 51 trillion yuan, annual bond issuance amounted to nearly 14 trillion yuan, and annual settlement volume exceeded 1030 trillion yuan; CCDC serviced more than 18 thousand institutional investors and over 21 million individual investors; the company set up a Shanghai headquarters to better support the development of Shanghai's international financial center; it also initiated the construction of a new generation of central registration and settlement platform and a data center, which aim to promote the modernization of national financial infrastructure. In terms of supporting supervision, the company continued to build a market risk management center and coordinated efforts to monitor price fluctuations in the government bond market per the requirements of Central Leading Group for Comprehensively Deepening Reform. Based on its overall framework and expertise advantages on FMI, CCDC is striving to build a transparent and standardized central financial assets registration platform. Regarding the implementation of macroeconomic policies, the company continued to actively cooperate with the implementation of monetary and fiscal policies such as government bond issuance and open market operations. In the area of facilitating finance reform and opening up, CCDC has launched a new English version CIOP client and fully supports the implementation of Hong Kong’s “Bond Connect” program. Chen also pointed out that the bond market had moved from high-speed development stage to a new stage of high-quality development. CCDC should further facilitate interconnectedness on the basis of a centralized depository system, and build an infrastructure system with organic integration, rational structure and efficient division of labor.
Liu Fan, Vice President of CCDC and President of ChinaBond Pricing Center Co., Ltd., briefed the committee on the progress of the ChinaBond indices in 2017. ChinaBond Pricing Center Co., Ltd. was incorporated in Shanghai in 2017, marking the start of corporate operation of the RMB benchmark pricing platform after nearly two decades of effort by CCDC. In addition, the ChinaBond indices made other tremendous progresses during the year: the Shanghai SKY Index was launched to better play the benchmark role of the Treasury bond yield curve; the ChinaBond yield curves became the benchmark for government bond market making supporting operations and a fair value measurement for the calculation of value added tax; the ChinaBond index products have become the benchmark for the World Bank’s RMB asset investment performance assessment and have become China's first underlying tracker for green bond index asset management products.
CCDC also briefed on the implementation of the guidance of the committee. The Company has made progress on some research projects such as "China's Interest Rate Market Structure," "Long-term Interest Rate Determination Mechanism," "China Bond Market Stability Index Study," "Application of Bond Fair Value in National Economic Accounting," and achieved some preliminary findings; CCDC studied on the potential application of the ChinaBond yield curves in bank deposit and loan pricing, and cooperated with commercial banks in the study on the application of the yield curves in internal deposit and loan fund transfer pricing, in line with the process of interest rate marketization reform in China; it also further optimized the financial failure early warning model; CCDC also compiled 13 investable bond indices and have authorized some fund managers to develop related index fund products; CCDC tried to construct implicit default probability from ChinaBond yield curves; and, CCDC continuously strengthened international cooperation and had conducted exchanges in a dozen of countries and regions during the past year.
The committee members stated that as a key national financial infrastructure, CCDC had played an important role in supporting the development of the bond market, supporting macroeconomic policies, supporting RMB internationalization and opening up the bond market. As an important market pricing benchmark, the ChinaBond indices has made major contributions to bond issuance pricing, market investment reference, market risk disclosure, index tracking investment and fund risk management.
The members concluded some instructions on the interest rate liberalization, prevention of financial risks, and Chinabonds indices. In terms of interest rate liberalization, several members agreed that the level of interest rate liberalization in the credit market needs to be further improved. The key to promoting the interest rate reform is to solve the problems in the market mechanism, to remove barriers to cross-sector transmission of interest rates, to continue to expand and deepen the reform of the bond market, and to improve the bond market system and mechanism. The committee agreed that it is important to strengthen the protection of the property rights of trading entities, optimize governance, and establish efficient incentive mechanisms. They also highlighted the importance of accelerating the opening up of financial markets, expanding investment base and increasing investors’ market-oriented pricing ability. Bond market interest rates are very important measures when promoting interest rate liberalization. To guard against and monitor financial risks, as several members said, we should further improve the risk prevention and response mechanism for the bond market, develop risk management tools, and strengthen interactions between the bond market, credit market, and non-performing asset market. Some members agreed that CCDC can further optimize the compilation of market stability index of the bond market, explore market stability indicators that are more in line with the actual conditions in China bond market, and provide references for risk monitoring. To further improve the pricing products, a number of members suggested further enriching the type and coverage of the ChinaBond indices and promoting the development of bond ETF products; expanding the overseas coverage and tractions of China's domestic bond price index; pushing forward the construction of an ChinaBond-index-based macroeconomic monitoring indicators; and further strengthening the research on valuation methods for non-standard assets.
ChinaBond Index Expert Steering Committee was established by CCDC in 2005 aiming to increase the scientificalness, fairness, and transparency of the ChinaBond indices. The committee is composed of experts with profound professional knowledge and rich practical experience in related fields. With its forward-looking vision and excellent professional standards, the committee provided directions and supports for the construction of ChinaBond indices, helping the indices comply with the needs of national reform and opening up and play an active supporting role in the implementation of the national financial strategy.