Monthly report / Clearstream supports liberalisation of Chinese financial market

17.08.2017
  • Continuous progress in Chinese market opening
  • Clearstream gets ready to support Bond Connect initiative

At the end of this month, the Shanghai International Financial Advisory Council will bring together top Chinese market regulators and representatives of leading international financial institutions involved in China’s ongoing financial liberalisation story. Deutsche Börse Group will also be present with its post-trade services provider Clearstream.

This high-level event will provide a perfect opportunity to take stock of recent milestones on the path to China’s market opening and Clearstream’s role in supplying its international expertise along the securities value chain to help make sure that liberalisation a working reality.

Recent announcements confirming the inclusion of a selection of mainland China-A shares in benchmark Emerging Market indices mark a new and exciting chapter in the opening of the Chinese market. As a result, analysts expect substantial new international interest in Chinese equities.

Mirroring the progress achieved with the Shanghai-Hong Kong Stock Connect in the equity field, the just-launched China Bond Connect represents a major breakthrough in the development of the China bond market. It will start to do for Chinese fixed income what Stock Connect has done for Chinese equities.

While the market for offshore RMB and comparable bonds is small by bond markets standards, totaling a “mere” USD 100 billion, the market for onshore bonds is huge – around USD 7-8 trillion, with less than two percent held by foreign investors via various quota schemes.

Clearstream is also getting ready to support the Bond Connect initiative and plans to offer both direct and indirect access to China’s fixed-income market. Marc Robert-Nicoud, CEO of Clearstream Holding, says: “Clearstream has been a strong supporter of the liberalisation of the Chinese capital markets ever since it opened its Hong Kong office in 1991. Our business is all about enabling investors and issuers to link up globally on the back of an efficient and safe infrastructure. We look very favourably on recent developments as they are in the best interest of all stakeholders.”

One recent example is Clearstream’s partnership with The China Central Depository and Clearing Company, which aims to extend Clearstream’s existing China Bond Link in order to offer investors direct access to the China interbank bond market.

Business overview

 July
2017
July
2016
Change (%)1YTD 2017YTD 2016Change (%)1
International business (ICSD)
Securities deposits (EUR bn)6,6366,719-1%6,7446,733+0%
Number of transactions (mn)3.52.9+22%25.520.3+26%
Domestic business (CSD)2
Securities deposits (EUR bn)4,4974,413+2%4,5184,408+3%
Number of transactions (mn)7.56.1+22%52.045.8+13%
Investment Funds Services (IFS) 
Securities deposits (EUR bn)2,2101,898+16%2,1661,855+17%
Number of transactions (mn)1.81.6+15%13.210.5+25%
Total
Assets under Custody (EUR bn)13,34313,030+2%13,42812,996+3%
Global Securities Financing (GSF)
Volume outstanding (EUR bn)455.3539.8-16%468.4529.2-11%

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1 Due to rounding, growth rates cannot be calculated from figures in the chart.

2 On 6 February 2017, Clearstream Banking Frankfurt has transferred its settlement volume to the pan-European securities settlement platform TARGET2-Securities. Since 7 February 2017, German settlement volume is processed solely via T2S.