Hong Kong: Bond Connect - new service
Clearstream Banking1 would like to inform customers that, effective
20 November 2017
customers will be able to settle and safekeep China securities traded in the China Interbank Bond Market (CIBM) via Clearstream Banking’s Bond Connect link.
Bond Connect is a new mutual access scheme that allows investors from Mainland China and overseas to trade in each other’s bond markets through a connection between related Mainland and Hong Kong financial infrastructure institutions. The first phase of the scheme – Northbound trading - went live on 3 July 2017, facilitating the access for foreign institutional investors to China via the Hong Kong market. Southbound trading will be explored in a later stage.
Bond Connect2 offers easier access than the CIBM Direct Access scheme as the application process has been simplified and shortened, and no capital commitment is required. While the investor eligibility and the investment scope remain the same as the CIBM Direct Access scheme, only cash bonds are eligible for Bond Connect at this stage.
The China Bond market is the third largest bond market in the world after the USA and Japan. The launch of Clearstream Banking’s Bond Connect link is part of Clearstream Banking’s ongoing commitment to provide our international customers with enhanced access to the Chinese market. Customers will benefit from our ICSD custody and connectivity infrastructure as well as our standard suite of value-added services, including corporate action processing and reporting. This initiative further complements our existing services for the settlement and safekeeping of Chinese securities, including our China Bond Link (via CIBM Direct Access scheme), Chinese A-shares (via Stock Connect) and B-shares that are listed on the mainland stock exchanges.
Impact on customers
To participate in Bond Connect, customers must open a sub-account with Central Moneymarkets Unit (CMU) in Hong Kong. Secondly, customers need to apply for a Trading ID from the China Foreign Exchange Trade System (CFETS) via the Bond Connect Company Limited (BCCL). Customers are invited to contact Clearstream Banking Client Services or their Relationship Officer for further support and guidance on the application and account opening process.
Settlement timings
The against payment settlement instruction deadlines will be as follows:
Central European Time (CET)
Instruction | Deadline from 20 November 2017 |
Receipts/Deliveries against payment | 00:35 SD |
Hong Kong Time (HKT)
Instruction | Deadline from 20 November 2017 |
Receipts/Deliveries against payment | 07:35 SD |
Cash deadlines
Offshore Renminbi (CNH) will be supported for funding purposes during this initial phase of Clearstream Banking’s Bond Connect link. The cash funding instruction deadlines will be as follows:
Central European Time (CET)
Instruction | Deadline from 20 November 2017 |
CNH Cash Pre-advice/Funding | 00:35 SD |
Hong Kong Time (HKT)
Instruction | Deadline from 20 November 2017 |
CNH Cash Pre-advice/Funding | 07:35 SD |
Further information
The Creation Link Guide – Hong Kong and related documentation will be updated in due course.
For further information, customers may contact Clearstream Banking Client Services or their Relationship Officer.
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1. Clearstream Banking refers collectively to Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248, and Clearstream Banking AG (for Clearstream Banking AG customers using the Creation platform), registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.
2. For more general information on the Bond Connect scheme, please refer to the Bond Connect website operated by BCCL: http://www.chinabondconnect.com/en/information-for-investors.htm