21st Century Business Herald reporter Tang Jing reported from Beijing on February 29th that the People’s Bank of China has issued a new notice regarding the counter business of the inter-bank bond market. The notice, effective from May 1, 2024, allows investors to invest in various bond varieties through counter business institutions, subject to compliance with investor suitability requirements.
The notice aims to expand the investment scope for institutional investors, enhance market liquidity and activity, and promote inclusive finance. It clarifies three key aspects: the types of counter business and transaction methods, the rules for investor account opening, and the inclusion of foreign investors in counter channels. This move is expected to attract more institutional investors to participate in the market.
Chief economist Ming Ming of CITIC Securities believes that the relaxation of restrictions on institutional investors will increase bond lending and derivatives trading varieties, benefiting both investors and the market. The over-the-counter bond investment varieties have been expanded to include treasury bonds, local government bonds, and policy financial bonds, offering a low-risk yet profitable investment option for residents.
The issuance of the notice is part of efforts to promote inclusive finance and stimulate the development of the bond market. The over-the-counter bond business has become an essential means of broadening residents’ investment channels, with government bonds providing safety and liquidity advantages over deposits. By encouraging residents to invest in bonds, the People’s Bank of China aims to increase property income and accelerate the growth of the multi-level bond market.
Currently, 30 commercial banks nationwide offer over-the-counter bond services, with minimum investments starting at 100 yuan. The new notice is expected to drive further growth in the over-the-counter bond market, providing residents with better access to bond investments. However, there is still room for improvement in the scale of the over-the-counter bond business for individual investors.
Experts suggest that residents should consider allocating a portion of bonds to their investment portfolio for sound financial management. Banks are urged to optimize their services, facilitate bond account openings, and strengthen investor suitability management to protect investors’ interests. The notice is seen as a positive step towards promoting the high-quality development of the bond market, broadening investment channels, optimizing the financing structure, and fostering the growth of multi-level bond markets.