Chinese regulators ban money brokers from supplying data feeds
Sources say regulators cited data security concerns
Move blocks bond traders from seeing real-time price quotes
Traders say they are ‘trading blindly’, turn to QQ, WeChat
(Adds quotes, background on data security in China)
SHANGHAI, March 15 (Reuters) - Chinese money brokers cut data feeds to vendors on Wednesday after a ban from regulators, traders said, sending participants in the country’s $21 trillion bond market scrambling for workarounds as Beijing tightens its grip on data.
The brokers, which include the joint ventures of Tullett Prebon and NEX International Ltd, were told to suspend the data feed business by Chinese regulators, sources told Reuters on Tuesday. Regulators cited data security concerns, and the fact that money brokers are not licensed to feed data to third-party vendors, the sources said.
Traders said that starting on Wednesday morning, bond price quotations from the money brokers, which also include ventures of BGC Partners, Central Tanshi and Compagnie Financiere Tradition, could not be displayed on financial terminals including qeubee, Wind and Dealing Matrix.
Chinese bond traders have heavily relied on these data platforms for real-time price quotes, so the sudden data ban sent traders scrambling to join QQ or WeChat messaging groups for price information.
“The change has made trading very inefficient,” said a trader at a foreign bank in Shanghai. “The way other traders quote the price in the messaging groups, the price would expire before I find my counterparty.”
The market disruption from the ban, most likely the government’s first move to tighten data management since announcing plans to set up a national data bureau, underlines how tighter screws could bring fresh uncertainty to business operations.
China has in recent years grown more concerned over data security and has rolled out new laws and compliance requirements for companies that handle large amounts of data. Such scrutiny ravaged the business of ride-hailing firm Didi Global, and almost halted overseas listings by Chinese companies.
The data feed ban shows how “under China’s increasingly conservative policies, security is more important than efficiency,” said an executive of an affected vendor, who declined to be identified because of the sensitivity of the matter.
Neither the money brokers nor their regulator, the China Banking and Insurance Regulatory Commission (CBIRC), have responded to requests for comment.
Unlike stock trading, which takes place in centralised exchange markets, bond trading in China is largely executed in an over-the-counter market where traders identify counterparties through price quotations.
As key players in the bond ecosystem, data vendors such as Wind Information Co, Sumscope Information Technology Co and Dealing Matrix consolidate real-time bond quotes from money brokers, lubricating trading.
Some vendors’ platforms had blank pages where prices used to be contributed by money brokers, according to screens seen by Reuters.
“We don’t know where the market is now, everyone is trading blindly,” said a bond fund manager at a big foreign asset manager in Shanghai. “We are back to the point-to-point trading mode...It’s not good for the opening-up of China’s bond market.”
Some traders said their colleagues could use iDeal, an instant messaging platform vetted by China Foreign Exchange Trade System (CFETS), but some cross-border funds do not have access.
One trader, who works at a foreign bank, lamented that she had not been able to join any private messaging groups due to compliance issues.
Key data vendors have been rushing to roll out alternative services to solve traders’ headaches.
Wind said on Wednesday that it was launching two major schemes to provide real-time direct bond quotations: WQ and WM. The bond quotation function interface WQ allows traders to make and manage quotations, while WM, or Wind Messenger, allows traders to communicate and negotiate on bond quotations.
Dealing Matrix said it has launched a platform for traders to get the latest price information from bond market makers on the Shanghai Stock Exchange. (Reporting by Winni Zhou, Li Gu, Jason Xue, Samuel Shen and Brenda Goh; Editing by Kim Coghill and Philippa Fletcher)
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