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Foreign banks given approval for interbank bonds trading
By Tom Kohn |
January 10, 2009, Saturday
|
Print Edition
Print Edition
China will allow foreign banks to trade corporate bonds in the interbank market for the first time, fulfilling a pledge made during talks with the United States in December, insiders said.
The approval applies to all foreign banks that meet the regulators' qualification rules, the insiders said, according to Bloomberg News.
China is opening its financial markets, allowing more foreign-bank ownership and encouraging bond and stock sales as it tries to stem the impact of a global slowdown on its economy.
The move to allow foreign banks to trade company bonds formalizes a promise made during the twice-yearly strategic economic dialogue with the US in December.
"The government may want to increase liquidity in the interbank market as it encourages more companies to issue debt this year to ease a shortage of funding," said Liu Junyu, a Shenzhen-based fixed-income analyst at China Merchants Bank Co.
Lai Xiaomin, a spokesman for the China Banking Regulatory Commission, wasn't immediately available to comment yesterday.
"Foreign incorporated banks in China will be allowed to trade bonds in China in the interbank market, both for their customers or their own accounts," China said in a statement after the December talks, without giving details. China's central bank said this week it would encourage domestic institutions to sell foreign currency bonds, and study allowing smaller companies to issue junk, or high-yield debt.
Overseas brokerages must start local joint ventures to get permission to trade securities or underwrite sales of shares and bonds in China. Six foreign investment banks have access to the domestic capital markets -- Goldman Sachs Group Inc; UBS AG; Credit Suisse Group AG; CLSA Asia-Pacific Markets; Morgan Stanley and Deutsche Bank AG.
China's central bank and foreign-exchange regulator this week warned of rising risks to the nation from "abnormal" capital flows caused by the international financial crisis, and said that it will monitor the issue.
The approval applies to all foreign banks that meet the regulators' qualification rules, the insiders said, according to Bloomberg News.
China is opening its financial markets, allowing more foreign-bank ownership and encouraging bond and stock sales as it tries to stem the impact of a global slowdown on its economy.
The move to allow foreign banks to trade company bonds formalizes a promise made during the twice-yearly strategic economic dialogue with the US in December.
"The government may want to increase liquidity in the interbank market as it encourages more companies to issue debt this year to ease a shortage of funding," said Liu Junyu, a Shenzhen-based fixed-income analyst at China Merchants Bank Co.
Lai Xiaomin, a spokesman for the China Banking Regulatory Commission, wasn't immediately available to comment yesterday.
"Foreign incorporated banks in China will be allowed to trade bonds in China in the interbank market, both for their customers or their own accounts," China said in a statement after the December talks, without giving details. China's central bank said this week it would encourage domestic institutions to sell foreign currency bonds, and study allowing smaller companies to issue junk, or high-yield debt.
Overseas brokerages must start local joint ventures to get permission to trade securities or underwrite sales of shares and bonds in China. Six foreign investment banks have access to the domestic capital markets -- Goldman Sachs Group Inc; UBS AG; Credit Suisse Group AG; CLSA Asia-Pacific Markets; Morgan Stanley and Deutsche Bank AG.
China's central bank and foreign-exchange regulator this week warned of rising risks to the nation from "abnormal" capital flows caused by the international financial crisis, and said that it will monitor the issue.
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