SHANGHAI, April 17 The People's Bank of China
(PBOC) is planning to ease restrictions now in place on foreign
central banks and financial institutions trading in China's
interbank bond market, sources with direct knowledge of the
situation told Reuters.
The move, if implemented, would mark another incremental
opening of China's capital markets, following an announcement on
April 10 that Beijing would allow cross-border investment
between the Hong Kong and mainland stock exchanges.
The sources cited a recent meeting between the central bank
and senior banking executives in Beijing, but did not give
further details on how the rules would be relaxed or any
contemplated timeline for implementation.
Foreign central banks and financial institutions are already
allowed to participate in the interbank market through the
Qualified Foreign Institutional Investor (QFII) programme, which
controls foreign access to Chinese financial assets -- including
stocks and bonds -- through a quota system.
Foreign central banks with currency swap agreements with the
PBOC, as well as commercial banks approved to conduct offshore
yuan clearing, can also apply for interbank bond market quota
through separate channels.
Offshore institutions owned about 191 billion yuan ($30.70
billion) in Chinese interbank bonds at the end of March,
according to Reuters analysis of figures published by the China
Central Depository Trust and Clearing Co Ltd, China's main
state-backed bond clearinghouse. That equals less than 1 percent
of total interbank bonds outstanding.
Sources also said the bank is planning on tightening
supervision of the bond market in general, in particular by
establishing leverage ratio guidelines for bond market
($1 = 6.2214 Chinese Yuan)
(Reporting by the Shanghai Newsroom; Writing by Pete Sweeney;
Editing by Jacqueline Wong)