Global custodian HSBC has heralded its first T+3 settlement in China’s Interbond Market (CIBM) as a potential boon for overseas institutional investors looking to access China’s fixed income market.
The extension to the bond settlement cycle was announced jointly by the China Central Depository & Clearing company, Shanghai Clearing House and China Foreign Exchange Trade System on August 23.
The move has been seen as further relaxation of China’s securities market in an attempt to align more with global practices and attract more overseas investors via global bond indices. It is also described by HSBC as “an important step which was long hoped for by foreign investors”.
The extension in the settlement cycle, applicable to cash bond trading, pledged repo, outright repo, and bond borrowing and lending, allows overseas investors more flexibility when rebalancing their portfolios and the possibility of reduced funding costs.
“Foreign investors’ participation has increased significantly with the continuous relaxation on CIBM in the trading mechanism, foreign exchange process, as well as settlement cycle,” said Patrick Wong, HSBC Securities Services head of China business development and client management. “We welcome the relaxation and trust that it will benefit international investors when they access this major fixed income market.”
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