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{{Short description|Bond market in China}}
{{Short description|Bond market in China}}
{{Use dmy dates|date=May 2024}}
{{Infobox company
{{Infobox company
| name = China Inter-Bank Bond Market
| name = China Inter-Bank Bond Market
| native_name = 银行间债券市场
| native_name = 银行间债券市场
| native_name_lang = ch
| native_name_lang = zh
| founded = 1997
| founded = 1997
| parent = People's Bank of China
| parent = People's Bank of China
}}
}}


The '''China Interbank Bond Market''' (CIBM) ([[Chinese language|Chinese]]: 银行间债券市场) is the largest domestic [[bond market]] in China, and as of 2022 is the second largest in the world, only trailing the United States bond market. The CIBM has over US$21.5 trillion in outstanding volume as of the end of 2022.<ref>{{Cite web |title=BIS Statistics: time-series details Q:CN:3P:1:1:1:A:A:TO1:A:A:A:A:A:I |url=https://stats.bis.org/statx/srs/tseries/DEBT_SEC2/Q.CN.3P.1.1.1.A.A.TO1.A.A.A.A.A.I?t=c1&c=&p=20184&i=102.1 |access-date=2022-06-15 |website=stats.bis.org}}</ref> The CIBM was formed in 1997 after the [[People's Bank of China]] (PBOC) mandated commercial banks to move their bond trading out of the stock exchanges and into an interbank market operating through an electronic trading system.
The '''China Interbank Bond Market''' (CIBM) ([[Chinese language|Chinese]]: 银行间债券市场) is the largest domestic [[bond market]] in China and, as of 2022, is the second-largest in the world, only trailing the United States bond market. The CIBM has over US$21.5 trillion in outstanding volume as of the end of 2022.<ref>{{Cite web |title=BIS Statistics: time-series details Q:CN:3P:1:1:1:A:A:TO1:A:A:A:A:A:I |url=https://stats.bis.org/statx/srs/tseries/DEBT_SEC2/Q.CN.3P.1.1.1.A.A.TO1.A.A.A.A.A.I?t=c1&c=&p=20184&i=102.1 |access-date=15 June 2022 |website=stats.bis.org}}</ref> The CIBM was formed in 1997 after the [[People's Bank of China]] (PBOC) mandated commercial banks to move their bond trading out of the stock exchanges and into an interbank market operating through an electronic trading system.


The CIBM has grown rapidly since its inception. Average daily turnover has increased by over 400% in the past 12 years.<ref name=":0">{{Cite web |date=September 2021 |title=Investing in China's Interbank Bond Market: A Handbook |url=https://www.icmagroup.org/assets/documents/About-ICMA/APAC/NAFMII-and-ICMA-Investing-in-Chinas-Interbank-Bond-Market-Handbook-September-2021-230921.pdf |website=International Capital Market Association Group}}</ref> In 2016 for the first time, medium and long-term [[Qualified Foreign Institutional Investor|qualified foreign institutional investors]] recognized by People's Bank of China were allowed to invest in the CIBM without quota limits.<ref name=":1">{{Cite web |title=New PBOC Regulation Welcomes More Foreign Participation in Interbank Bond Market {{!}} Article {{!}} Chambers and Partners |url=https://chambers.com/articles/new-pboc-regulation-welcomes-more-foreign-participation-in-interbank-bond-market |access-date=2022-06-15 |website=chambers.com |language=en}}</ref> And in March 2022, overseas institutional investors made up 2.9 percent of the outstanding volume of bonds under custody in CIBM.<ref>{{Cite web |title=The People's Bank of China Financial Market Report (March 2022) |url=http://www.pbc.gov.cn/en/3688110/3688172/4437084/4542771/index.html |access-date=2022-06-15 |website=www.pbc.gov.cn}}</ref>
The CIBM has grown rapidly since its inception. Average daily turnover has increased by over 400% in the past 12 years.<ref name=":0">{{Cite web |date=September 2021 |title=Investing in China's Interbank Bond Market: A Handbook |url=https://www.icmagroup.org/assets/documents/About-ICMA/APAC/NAFMII-and-ICMA-Investing-in-Chinas-Interbank-Bond-Market-Handbook-September-2021-230921.pdf |website=International Capital Market Association Group}}</ref> In 2016 for the first time, medium and long-term [[Qualified Foreign Institutional Investor|qualified foreign institutional investors]] recognized by People's Bank of China were allowed to invest in the CIBM without quota limits.<ref name=":1">{{Cite web |title=New PBOC Regulation Welcomes More Foreign Participation in Interbank Bond Market {{!}} Article {{!}} Chambers and Partners |url=https://chambers.com/articles/new-pboc-regulation-welcomes-more-foreign-participation-in-interbank-bond-market |access-date=15 June 2022 |website=chambers.com |language=en}}</ref> And in March 2022, overseas institutional investors made up 2.9 percent of the outstanding volume of bonds under custody in CIBM.<ref>{{Cite web |title=The People's Bank of China Financial Market Report (March 2022) |url=http://www.pbc.gov.cn/en/3688110/3688172/4437084/4542771/index.html |access-date=15 June 2022 |website=www.pbc.gov.cn}}</ref>


== Market infrastructure and major participants ==
== Market infrastructure and major participants ==
The CIBM is an [[Over-the-counter (finance)|over-the-counter]] market between institutional investors. The trading system was developed by the China Foreign Exchange Trade System (CFETS). CFETS provides trade processing, training, and benchmark services for the CIBM as well as monitoring transactions and providing support for [[Monetary transmission mechanism|monetary policy transmission]] of the People's Bank of China. The Shanghai Clearing House and China Central Depository & Clearing Co., Ltd. provides bond ownership, transaction information, clearing and settlement services for market participants.<ref name=":0" /> With the authorization of the People's Bank of China, the Interbank Center and China Central Depository & Clearing Corporation may disclose market-related information.<ref>{{Cite web |title=全国银行间债券市场债券交易管理办法 |url=http://www.pbc.gov.cn/eportal/fileDir/image_public/rhwg/000502f.html |url-status=live |access-date=June 15, 2022 |website=pbc.gov.cn}}</ref>
The CIBM is an [[Over-the-counter (finance)|over-the-counter]] market between institutional investors. The trading system was developed by the [[China Foreign Exchange Trade System]] (CFETS). CFETS provides trade processing, training, and benchmark services for the CIBM, monitoring transactions, and providing support for [[Monetary transmission mechanism|monetary policy transmission]] of the People's Bank of China. The Shanghai Clearing House and China Central Depository & Clearing Co., Ltd. provide market participants with bond ownership, transaction information, and clearing and settlement services.<ref name=":0" /> With the authorization of the People's Bank of China, the Interbank Center and China Central Depository & Clearing Corporation may disclose market-related information.<ref>{{Cite web |title=全国银行间债券市场债券交易管理办法 |url=http://www.pbc.gov.cn/eportal/fileDir/image_public/rhwg/000502f.html |access-date=15 June 2022 |website=pbc.gov.cn}}</ref>
{| class="wikitable"
{| class="wikitable"
|+
|+
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!Fixed-income Products
!Fixed-income Products
|-
|-
|China Foreign Exchange Trade System
|[[China Foreign Exchange Trade System]]
|Trade repository, facilitating over-the-counter trading
|Trade repository, facilitating over-the-counter trading
|All products traded on the CIBM
|All products traded on the CIBM
|-
|-
|Shanghai Clearing House
|[[Shanghai Clearing House]]
| rowspan="2" |Registration, depository, clearing and settlement
| rowspan="2" |Registration, depository, clearing and settlement
|Chinese government bonds, central bank bills, financial bonds, and enterprise bonds.
|Chinese government bonds, central bank bills, financial bonds, and enterprise bonds.
|-
|-
|China Central Depository & Clearing
|[[China Central Depository & Clearing]]
|credit risk mitigations, debt financing instruments, Negotiable Certificate Deposits
|credit risk mitigations, debt financing instruments, Negotiable Certificate Deposits
|}
|}
Line 34: Line 35:


== International Market Access Channels and Bond Connect ==
== International Market Access Channels and Bond Connect ==
As early as 2010, the People's Bank of China started a pilot program for select overseas participants to invest in the CIBM.<ref>{{Cite web |title=Notice of the People's Bank of China on Issues Concerning the Pilot Program on Investment in the Interbank Bond Market with RMB Funds |url=http://www.pbc.gov.cn/english/130733/2862918/index.html |url-status=live |access-date=June 15, 2022 |website=pbc.gov.cn}}</ref> By 2013 this expanded to [[Qualified Foreign Institutional Investor|qualified foreign institutional investors]] with set quotas, and by 2016 they could invest without set quotas.<ref name=":1" />
As early as 2010, the People's Bank of China started a pilot program for select overseas participants to invest in the CIBM.<ref>{{Cite web |title=Notice of the People's Bank of China on Issues Concerning the Pilot Program on Investment in the Interbank Bond Market with RMB Funds |url=http://www.pbc.gov.cn/english/130733/2862918/index.html |access-date=15 June 2022 |website=pbc.gov.cn}}</ref> By 2013 this expanded to [[Qualified Foreign Institutional Investor|qualified foreign institutional investors]] with set quotas. By 2016 they could invest without set quotas.<ref name=":1" />


In 2017, '''Bond Connect''' was launched, providing greater convenience for overseas investors as well as increase the scope of investable products. Bond Connect provided overseas investors real-time delivery versus payment as well as access via mainstream international e-trading platforms. With the addition of Bond Connect, bonds in the CIBM were included in Bloomberg Global Aggregate Indices, which took effect in April 2019.<ref>{{Cite news |title=Bloomberg Confirms China Inclusion in the Bloomberg Barclays Global Aggregate Indices {{!}} Press {{!}} Bloomberg LP |language=en-US |work=Bloomberg L.P. |url=https://www.bloomberg.com/company/press/bloomberg-confirms-china-inclusion-bloomberg-barclays-global-aggregate-indices/ |access-date=2022-06-15}}</ref><ref name=":0" /> This allowed for [[Exchange-traded fund|Exchange traded funds]] like [[KraneShares]] Bloomberg China Bond Inclusion ETF.<ref>{{Cite news |date=2021-06-04 |title=KraneShares Launches Bloomberg Barclays China Bond Inclusion ETF (Ticker: KBND) on the New York Stock Exchange |language=en |work=Bloomberg.com |url=https://www.bloomberg.com/press-releases/2021-06-04/kraneshares-launches-bloomberg-barclays-china-bond-inclusion-etf-ticker-kbnd-on-the-new-york-stock-exchange |access-date=2022-06-15}}</ref>
In 2017, '''Bond Connect''' was launched, providing greater convenience for overseas investors as well as increase the scope of investable products. Bond Connect provided overseas investors real-time delivery versus payment as well as access via mainstream international e-trading platforms. With the addition of Bond Connect, bonds in the CIBM were included in Bloomberg Global Aggregate Indices, which took effect in April 2019.<ref>{{Cite news |title=Bloomberg Confirms China Inclusion in the Bloomberg Barclays Global Aggregate Indices {{!}} Press {{!}} Bloomberg LP |language=en-US |work=Bloomberg L.P. |url=https://www.bloomberg.com/company/press/bloomberg-confirms-china-inclusion-bloomberg-barclays-global-aggregate-indices/ |access-date=15 June 2022}}</ref><ref name=":0" /> This allowed for [[Exchange-traded fund|Exchange traded funds]] like KraneShares Bloomberg China Bond Inclusion ETF.<ref>{{Cite news |date=4 June 2021 |title=KraneShares Launches Bloomberg Barclays China Bond Inclusion ETF (Ticker: KBND) on the New York Stock Exchange |language=en |work=Bloomberg.com |url=https://www.bloomberg.com/press-releases/2021-06-04/kraneshares-launches-bloomberg-barclays-china-bond-inclusion-etf-ticker-kbnd-on-the-new-york-stock-exchange |access-date=15 June 2022}}</ref>


== References ==
== References ==

Latest revision as of 02:30, 16 May 2024

China Inter-Bank Bond Market
Native name
银行间债券市场
Founded1997
ParentPeople's Bank of China

The China Interbank Bond Market (CIBM) (Chinese: 银行间债券市场) is the largest domestic bond market in China and, as of 2022, is the second-largest in the world, only trailing the United States bond market. The CIBM has over US$21.5 trillion in outstanding volume as of the end of 2022.[1] The CIBM was formed in 1997 after the People's Bank of China (PBOC) mandated commercial banks to move their bond trading out of the stock exchanges and into an interbank market operating through an electronic trading system.

The CIBM has grown rapidly since its inception. Average daily turnover has increased by over 400% in the past 12 years.[2] In 2016 for the first time, medium and long-term qualified foreign institutional investors recognized by People's Bank of China were allowed to invest in the CIBM without quota limits.[3] And in March 2022, overseas institutional investors made up 2.9 percent of the outstanding volume of bonds under custody in CIBM.[4]

Market infrastructure and major participants

[edit]

The CIBM is an over-the-counter market between institutional investors. The trading system was developed by the China Foreign Exchange Trade System (CFETS). CFETS provides trade processing, training, and benchmark services for the CIBM, monitoring transactions, and providing support for monetary policy transmission of the People's Bank of China. The Shanghai Clearing House and China Central Depository & Clearing Co., Ltd. provide market participants with bond ownership, transaction information, and clearing and settlement services.[2] With the authorization of the People's Bank of China, the Interbank Center and China Central Depository & Clearing Corporation may disclose market-related information.[5]

Name Main Functions Fixed-income Products
China Foreign Exchange Trade System Trade repository, facilitating over-the-counter trading All products traded on the CIBM
Shanghai Clearing House Registration, depository, clearing and settlement Chinese government bonds, central bank bills, financial bonds, and enterprise bonds.
China Central Depository & Clearing credit risk mitigations, debt financing instruments, Negotiable Certificate Deposits

[2]

International Market Access Channels and Bond Connect

[edit]

As early as 2010, the People's Bank of China started a pilot program for select overseas participants to invest in the CIBM.[6] By 2013 this expanded to qualified foreign institutional investors with set quotas. By 2016 they could invest without set quotas.[3]

In 2017, Bond Connect was launched, providing greater convenience for overseas investors as well as increase the scope of investable products. Bond Connect provided overseas investors real-time delivery versus payment as well as access via mainstream international e-trading platforms. With the addition of Bond Connect, bonds in the CIBM were included in Bloomberg Global Aggregate Indices, which took effect in April 2019.[7][2] This allowed for Exchange traded funds like KraneShares Bloomberg China Bond Inclusion ETF.[8]

References

[edit]
  1. ^ "BIS Statistics: time-series details Q:CN:3P:1:1:1:A:A:TO1:A:A:A:A:A:I". stats.bis.org. Retrieved 15 June 2022.
  2. ^ a b c d "Investing in China's Interbank Bond Market: A Handbook" (PDF). International Capital Market Association Group. September 2021.
  3. ^ a b "New PBOC Regulation Welcomes More Foreign Participation in Interbank Bond Market | Article | Chambers and Partners". chambers.com. Retrieved 15 June 2022.
  4. ^ "The People's Bank of China Financial Market Report (March 2022)". www.pbc.gov.cn. Retrieved 15 June 2022.
  5. ^ "全国银行间债券市场债券交易管理办法". pbc.gov.cn. Retrieved 15 June 2022.
  6. ^ "Notice of the People's Bank of China on Issues Concerning the Pilot Program on Investment in the Interbank Bond Market with RMB Funds". pbc.gov.cn. Retrieved 15 June 2022.
  7. ^ "Bloomberg Confirms China Inclusion in the Bloomberg Barclays Global Aggregate Indices | Press | Bloomberg LP". Bloomberg L.P. Retrieved 15 June 2022.
  8. ^ "KraneShares Launches Bloomberg Barclays China Bond Inclusion ETF (Ticker: KBND) on the New York Stock Exchange". Bloomberg.com. 4 June 2021. Retrieved 15 June 2022.
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