Introduction to China Interbank Bond Market Counter Business and Book-Entry Savings Bond Business
China interbank bond market counter business (“counter business”) are services provided by financial institutions through their physical branches and electronic channels to open accounts for investors, distribute bonds and act as market-makers, as well as such services as bond custody and settlement, pledge registration, agency payment of principal and interest and inquiry. By the end of May 2020, the counter business has covered book-entry treasury bonds, local treasury bonds, bonds issued by China Development Bank, Agricultural Development Bank of China and Export-Import Bank of China. The counter business is jointly operated by the Central Bond Counter Business System of CCDC and the Bond Counter Business Systems of commercial bank operators.
Book-entry savings bonds are non-negotiable RMB treasury bonds issued by the Ministry of Finance within the territory of China, sold to individual investors through authorized syndicate members, and whose ownership is recorded electronically. There are 40 commercial banks authorized to sell savings bonds (valid from 2018 to 2020), and individual investors may purchase savings bonds at physical branches of syndicate members within the issuance period. Although book-entry savings bonds are non-negotiable, they can be redeemed before maturity or posted as collateral for loans. Book-entry savings bond business is jointly operated by the Business Management Information System of the Ministry of Finance and the Business Processing Systems of syndicate members.
A two-tier depository model is applied to both OTC bond and book-entry savings bond business, in which CCDC is the primary depository, and syndicate members are secondary depositories. CCDC is responsible for the truthfulness, accuracy, completeness and security of the primary bond account records while syndicate members are responsible for those of secondary bond account records. Under the authorization of the Ministry of Finance and the People’s Bank of China, CCDC may verify secondary bond accounts held by syndicate members, and provide OTC bond and book-entry savings bond investors with inquiry services and voice verification of secondary bond account balance (Tel: 400-666-5000).