Mainland China banks to offer over-the-counter interbank bond trading from May 1, PBOC says
- Move aims to ‘efficiently convert residents’ bank savings into bond investments’, central bank says
- Available through about 30 commercial banks, the initiative aims to draw individual investors with more types of bonds and less red tape
Both mainland Chinese and international investors will be allowed to invest in interbank bonds through over-the-counter trades from May 1 as part of Beijing’s effort to attract investors into the country’s US$21.96 trillion bond market.
“By allowing investors to use the over-the-counter channels to invest in bond markets, it can efficiently convert residents’ bank savings into bond investments,” the People’s Bank of China (PBOC) said in a statement on Thursday. “This will enhance the investment returns for the residents, while at the same time it can further develop the bond market.”
In general, bonds offer better returns than bank savings, the central bank said, adding that the scale of government bonds held directly by Chinese residents remains relatively small compared to other mature markets.
Mainland China’s bond market is the world’s second-largest, with an outstanding volume of 158 trillion yuan (US$21.96 trillion). PBOC said the new rule could further encourage more investors to invest in the bond market.
At present, about 30 commercial banks offer over-the-counter bond trading services, but the products available are limited and trading is subject to requirements that deter individual investors.