The implementation rules of the Shanghai Stock Exchange will expand the channels for foreign investment to participate in the exchanges' bond market channels

Reporter Wu Xiaolu Xing Meng

The rules of the debt market of foreign direct investment exchanges are here!

On June 28, according to the "Announcement of the State Foreign Exchange Administration of the China Securities Supervision and Administration Commission of the People's Bank of China" ([2022] No. 4) (hereinafter referred to as the "Announcement"), the Shanghai Stock Exchange issued the "Shanghai Stock Exchange China Securities Registration and Settlement Co., Ltd. The company's overseas institutional investor bond transaction and registration and settlement business implementation rules "(hereinafter referred to as the" Implementation Rules "), further clarifying that overseas institutional investors participated in the hosting, account opening, transaction, registration, and settlement of the Shanghai Stock Exchange's bond market. The "Implementation Rules" will be implemented from June 30, 2022.

Earlier (May 27), the People's Bank of China, the CSRC, and the Foreign Exchange Bureau issued the "Announcement", which proposed to support foreign institutional investors directly or through interconnection exchanges in the bond market. The "Implementation Rules" of the Shanghai Stock Exchange is the specific business arrangement of the Chinese Foreign Investment in the Exchange's Bond of the Exchange.

Chen Li, chief economist of Chuancai Securities, said in an interview with a reporter from the Securities Daily that the move will expand the investment scale of foreign investors to the exchange market. Favorite the long -term development of the bond market and promote the better development of my country's financial markets. With the steady opening of the Chinese bond market to the outside world, it will further promote the efficiency of global capital flow and resource allocation, improve global recognition of RMB assets, and accelerate the internationalization process of RMB.

Foreign -funded participation in exchange bond market

Performance is expected to increase

Specifically, the main content of the "Implementation Rules" includes four aspects: First, foreign institutional investors should entrust eligible commercial banks as custodians and entrust domestic securities companies with membership of the Shanghai Stock Exchange as transaction participants to participate in bond transactions and follow them in accordance with the cases and follow them in accordance with the bond transactions and follow them in accordance with the case. China's settlement relevant regulations open a securities account, and a securities account can only designate a transaction participant.

Second, overseas institutional investors can participate in bonds (including exchanging corporate bonds and convertible corporate bonds), asset -supported securities, bond loans, related derivative products for risk management, and the issuance, transaction or transfer of bond funds.

Third, overseas institutional investors should entrust domestic securities companies with Chinese settlement participants to handle the settlement business.

Fourth, overseas institutional investors who have been allowed to enter the interbank bond market can invest as institutional investors in professional investors to invest in the Shanghai Stock Exchange bond market.

According to the data of the People's Bank of China, as of the end of May, the balance of custody of the Chinese bond market was 1.391 trillion yuan, and the balance of custody of overseas institutions in the Chinese bond market was 3.74 trillion yuan, accounting for 2.7%of the Chinese bond market custody balance.

CITIC Securities Chief Economist said in an interview with the Securities Daily reporter that the "Implementation Rules" clarified the types of exchange bond business that foreign institutional investors could participate in. Corporate bonds and convertible corporate bonds are two types of bonds in the exchange bond market that are clearly different from the inter -bank market. Foreign capital is an incremental allocation asset. On the whole, the proportion of foreign institutions currently participating in exchange bonds is lower than interbank bonds. The implementation of the "Implementation Rules" is expected to usher in improvement.

Index debt group

Or become a foreign capital entry point

It is worth noting that the "Implementation Rules" incorporate bond funds into the scope of foreign investment. In this regard, it is clearly believed that the index debt base may become a foreign entry point. For foreign -funded institutions, the initial Chinese bond market is more concerned about Beta strategies, not Alpha strategies. The "Implementation Detailed Rules" clearly states that overseas institutions can participate in the issuance and subscription of bond funds. Among them, the index debt -based base is more in line with foreign -funded preferences, and the difficulty of entry is relatively low.

For "foreign institutional investors who have been allowed to enter the interbank bond market can invest as institutional investors in professional investors to invest in the Shanghai Stock Exchange bond market." Obviously, this also reflects the two major trends of "interconnection and interconnection" and "opening to the outside world" in my country's bond market. In the long run, with the continuous introduction and improvement of the bond market opening policy, foreign investment in the domestic bond market is expected to continue to improve.

"The international development of my country's capital market attaches great importance to the formulation of rules and rules, and promotes internationalization through the standardization of the system. This detailed development facilitates the long -term stable development of the exchange bond market, which can not only optimize the market structure of the exchanges' bond market, but also enhance the market The breadth and depth. "Tian Lihui, the dean of the Institute of Finance Development of Nankai University, told the Securities Daily reporter.

The Shanghai Stock Exchange stated that the "Implementation Rules" specifically regulates the relevant behavior of overseas institutional investors to participate in bond transactions in Shanghai Stock Exchange, and broaden the channels for overseas institutional investors to participate in the exchange bond market. In the next step, the Shanghai Stock Exchange will continue to improve various bond trading system arrangements, provide domestic and foreign investors with a more friendly and convenient investment environment, make full use of the two domestic and foreign resources, better serve the real economy, and build bonds that meet the requirements of high -quality development requirements The market is open to the outside world.

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