China Foreign Exchange Trade System (CFETS) and Hong Kong Exchanges and Clearing Limited (HKEX) announced today (Wednesday) the formation of a joint venture company in Hong Kong, Bond Connect Company Limited (BCCL), to support Bond Connect related trading services.
Bond Connect is a new mutual market access scheme that will allow investors from Mainland China and overseas to trade in each other's bond markets through a market infrastructure linkage in Hong Kong, as announced by the People's Bank of China (PBC) and Hong Kong Monetary Authority (HKMA) on 16 May 2017. Per the regulators' announcement, Northbound trading – international investors accessing the China Interbank Bond Market (CIBM) – will begin first, while Southbound trading will be explored at a later stage.
BCCL will support and assist admission and registration for Northbound investors, and liaise closely with the global access platforms through which Northbound investors will trade CIBM instruments. CFETS and its subsidiary company own 60 per cent of BCCL, while 40 per cent is owned by HKEX. BCCL will actively proceed with related work under the guidance of PBC and HKMA.
"Bond Connect shows the Mainland's support for the Hong Kong bond market as well as another attempt of the China Interbank Bond Market to open up further," said Dr Pei Chuanzhi, President of CFETS. "Through initial bond market infrastructure connectivity and cross-border cooperation, we expect to attract a greater number of foreign investors to the Mainland bond market. Greater investment convenience will be provided in due course in line with the overall liberalisation plan of the Mainland financial market."
"This is a ground-breaking scheme that will give foreign investors direct, convenient access to China's vast bond market for the very first time," said HKEX Chairman C K Chow. "Once again, Hong Kong is playing a critical role in connecting the international investment community with China."
"Bond Connect is an important milestone in the Mutual Market programme following the launch of Shanghai Connect in 2014 and Shenzhen Connect last year," said HKEX Chief Executive Charles Li. "With Bond Connect, we are expanding the Mutual Market programme from stocks into a new asset class. It will provide an efficient access channel to China's onshore bond market via Hong Kong, bringing benefits to the Mainland, Hong Kong and international investors through more choice, more opportunity and more convenience."
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