Bond Connect adds new features and ‘market makers’ to give foreign investors greater access to China’s US$9 trillion bond market
- Central bank official unveils plans to further open up China’s bond market in a speech in Hong Kong marking the second anniversary of the cross-border trading scheme
- Still no mention, however, of launching long-awaited ‘southbound’ trading, which would give Chinese investors access to foreign bond markets
A scheme designed to give overseas investors and those in mainland China access to each other’s bond markets celebrated its second anniversary on Wednesday, with the announcement of new features and “market makers” to boost trading.
Gao Fei, deputy inspector at the People’s Bank of China, unveiled the plans to further open up China’s bond market in a speech to hundreds of bankers and traders at the Bond Connect Anniversary Summit 2019, held at the headquarters of bourse operator Hong Kong Exchanges and Clearing.
He did not, however, address the issue of when so-called southbound trading would commence, allowing mainland Chinese investors to buy bonds traded in Hong Kong and other overseas markets.
“We will expand the bond connect scheme by adding more market makers,” Gao said. “We will also add in new bond index products or ETF [exchange traded funds] for foreign international investors to trade Chinese bonds.”
Market makers, normally big financial institutions, are effectively middlemen between the bond issuer and the bidders, quoting prices for the bonds and ensuring liquidity.
Gao’s pledge came a day after Chinese Premier Li Keqiang told global business leaders and government officials at the World Economic Forum in Dalian that Beijing will continue to open its markets to foreign investors, including bond trading.
