Clearstream to access Bond Connect

03.07.2017

The People’s Bank of China (PBoC) and the Hong Kong Monetary Authority (HKMA) have today announced the launch of the initial phase of Bond Connect, the latest cross-border bond trading and settlement scheme that will provide a link between the Mainland China Central Securities Depositories (CSDs), China Central Depository & Clearing Co. (CCDC) and Shanghai Clearing House (SHCH), and the Central Moneymarkets Unit (CMU) in Hong Kong.

Bond Connect will link China’s Interbank Bond Market (CIBM) with the world, where international investors will have “Northbound” access to trade bonds on the China Foreign Exchange Trading System (CFETS) via international bond trading platforms for the very first time. The intention to offer “Southbound” trading will come later, which will give mainland investors the possibility to trade in major overseas bond markets.

Clearstream customers already benefit from access to the onshore direct CIBM scheme via our China Bond Link. Now with Bond Connect, foreign investors will be able to benefit from an additional investment channel, with easy and quota-free access. The scope of eligible investors for Northbound trading will be consistent with that for our China Bond Link. Additionally, trading will be more efficient along with a simplified and more streamlined registration process.

Bond Connect represents a major breakthrough in the development of the China bond market, and further enhances Clearstream’s overall approach to the ongoing internationalisation of the Chinese fixed income market, which is outlined in our China Strategy section. All of these access channels into the CIBM – the third largest bond market in the world – contribute to the growing international recognition of the important global role that the CIBM has assumed over the last several years.

We are getting ready to support Bond Connect and will shortly offer both direct and indirect access to the Chinese fixed income market. We have been working hard to extend our own China market access and plan to launch our Bond Connect offering in the near future; further details will follow in due course.