CCDC and Clearstream Signs MoU on CIBM Cooperation:A New Chapter of Win-Win Cooperation for Financial Market Infrastructure Cross-border Linkage
Shanghai, China – On March 2nd, China Central Depository & Clearing Co., Ltd. (CCDC) and Clearstream Banking S.A. (CBL), one of the most influential financial market infrastructures (FMI) in the world, held a ceremony in Shanghai to sign a Memorandum of Understanding (MoU) on their cooperation in China Interbank Bond Market (CIBM). Mr. LI Jun, Vice Director of Shanghai Municipal Government Financial Services Offices, Mr. Jeffrey Tessler, Chairman of CBL, Mr. Philip Brown, Co-CEO of CBL, Mr. Philippe Seyll, Co-CEO of CBL, Mr. SHUI Ruqing, Chairman of CCDC and Mr. BAI Weiqun, Chief Supervisor of CCDC, etc. attended the event and witnessed the historical moment.
In recent years, the opening up of CIBM led by the People’s Bank of China and other regulatory authorities has been very productive, which can be demonstrated by the expanded scope of qualified overseas investors, the removal of quota restrictions, and the simplified administration procedures. So far, more than 430 overseas investors have entered CIBM and opened accounts with CCDC, currently holding around 800 billion RMB of bond assets. As shown by the practices of developed markets in the world, depository and settlement infrastructures are the cornerstone of safe, efficient and functional bond markets, and linkage between FMIs is an important approach to bond market opening up. Signing the MoU marked the official launch of CCDC and CBL’s cross-border linkage cooperation. The linkage between CCDC and CBL will give full consideration to the characteristics of CIBM, and will respect the market’s current regulatory framework and basic institutional arrangements. By combining the advantages of CCDC as a Chinese local institution and those of CBL in servicing overseas clients, the linkage will notably facilitate overseas investor’s entrance into CIBM.
As stated by Mr. Shui Ruqing, CCDC will keep enhancing its collaboration with major FMIs around the globe, offering overseas investors a safe and efficient access into CIBM. CCDC and CBL have maintained close communication with each other. Taking this linkage cooperation an opportunity, the two institutions hope to provide better cross-border depository and settlement services for RMB fixed-income products based on their respective platforms. To contribute to the national strategy of building the Shanghai international financial center, CCDC intends to establish in Shanghai window dedicated to supporting CIBM opening up, which explains why the city was chosen to host this signing ceremony.
According to Mr. Jeffrey Tessler, Clearstream has been steadfastly supporting RMB and China’s financial market in their pursuit of greater global importance. Through its worldwide connection as well as client and partner networks, and by matching global demand with supply, Clearstream is dedicated to achieving the following goals: First, working as a conduit for international investors to access China’s onshore market, to support the internationalization of China’s domestic market; second, to serve as the gate for Chinese investors to approach the international financial market; third, together with China’s local financial market infrastructures, to support RMB internationalization by developing solutions to manage clients’ RMB liquidity demands. Clearstream hopes to work closely with CCDC to become a key engine driving the international development of China’s financial market.
Mr. LI Jun pointed out that, during China’s 13th Five-Year Plan period, as planned by the State and by the Shanghai municipality, Shanghai will be built into the global center for the formation of RMB benchmark prices, for asset pricing and for payment and settlement. A key step towards this end would be to strengthen bond depository and settlement infrastructures and to support the operation of global RMB bond markets through cross-border linkage arrangements. The cooperation between CCDC and CBL would be helpful for the interconnection of domestic and foreign bond markets, for the opening up of CIBM, and for the development of Shanghai as an international financial center.
One who knows how to ride the trend can achieve more with less effort. As RMB was formally included into the SDR basket, overseas institutions’ demand for RMB bond assets keeps growing. Faster opening up of CIBM will produce a long and positive influence over RMB internationalization. CCDC and CBL’s linkage cooperation can introduce overseas investors in batches into CIBM and therefore enjoys a bright prospect. In the future, the two institutions will continue to work with each other at higher levels, in greater depth and on a wider scale, trying to make their win-win cooperation an example for others to follow.
China Central Depository & Clearing Co., Ltd. (CCDC) is the sole Central Securities Depository (CSD) established with the approval of the State Council of China. The institution, as a core financial market infrastructure, supports the daily operation of China Interbank Bond Market (CIBM) and functions as a core platform for CIBM opening up. Up to now, CCDC has over 93 trillion RMB of all types of financial assets under its depository, among which 43 trillion are bond assets (including the vast majority of sovereign, quasi-sovereign and high-grade bonds in China), and had settled transactions valuing more than 1,000 trillion RMB over 2016. More than 15,000 accounts have been opened with CCDC by domestic investors and over 430 overseas investors, who currently hold more than 800 billion RMB of bond assets, accounting for 90% of the total bond holdings of overseas investors in CIBM.
Clearstream Banking is a wholly-owned subsidiary of the Deutsche Borse Group and also one of the most influential international central securities depositories (ICSD) in the world. The institution has around 13 trillion euro of securities under its depository, and settles more than 250,000 transactions every day. Clearstream now can help its 2,500 plus clients in more than 110 countries to invest in 56 regional markets around the world.