Expanding the OTC Bond Market: SPDB Helps Innovate the Issuance of OTC Bond Products
The OTC bond market in China has witnessed a wave of innovation recently. Shanghai Pudong Development Bank (SPDB), one of the leading banks in the country, has actively participated in the pilot work of the Agricultural Development Bank of China’s over-the-counter (OTC) bond business for small and medium-sized financial institutions. SPDB has supported qualified investors in investing in the inter-bank bond market through bank counter channels, thereby contributing to the growth of the multi-level bond market and strengthening the financial support for the real economy.
The OTC bond market, interbank bond market, and exchange bond market are three crucial components of China’s bond market. The OTC bond market serves as an extension of the interbank bond market and plays a significant role in inclusive finance and financial innovation.
The development of the OTC bond market has been gaining attention since last year. The central bank has proposed the steady development of OTC bond business to meet the diverse investment and financing needs of the market. Emphasizing the deepening of financial market reforms, the central bank has called for accelerating the development of the OTC bond market and establishing and improving multi-level infrastructures such as bond custody, market making, and liquidation systems.
In response to these recommendations, financial institutions have been proactively taking action. On July 18, 2023, the Agricultural Development Bank of China issued counter bond products for the first time to qualified investors, including small and medium-sized financial institutions and asset management institutions, with a bond size of 1 billion yuan. As one of the undertaking banks, Shanghai Pudong Development Bank successfully completed the sale of 200 million yuan worth of innovative counter bonds. This enable small and medium-sized financial institutions and other investors to participate in the interbank bond market through bank counter channels, promoting the layered construction of the bond market and contributing to inclusive finance.
Shanghai Pudong Development Bank has been at the forefront of supporting the development of the OTC bond market since its official opening in 2018. The bank has continuously innovated its OTC bond products, collaborated with regulators and financial institutions, and carried out pilot projects to promote the steady growth of the business. This has helped the bank maintain its leadership in this field.
In July 2021, Shanghai Pudong Development Bank launched the over-the-counter bond transaction business of the Shanghai Clearing House. In October 2022, the bank’s small and medium-sized financial institutions participated in the secondary bond transaction of the stock interest rate counter bond business, marking the first time for customers of rural credit cooperatives to engage in counter bond business with Shanghai Pudong Development Bank. On November 16 of the same year, the bank introduced the first-level distribution business for the counter bond business of small and medium-sized financial institutions. In July 2023, Shanghai Pudong Development Bank upgraded the China Bond counter bond listing system to further enhance its service level.
The responsible person for the relevant business at Shanghai Pudong Development Bank stated that the bank will continue to consolidate its leading position in the OTC bond market. It plans to strengthen the innovation of various OTC bond businesses, increase the inclusiveness of finance, and better meet the diverse and personalized investment needs of the market. The bank aims to enhance the inclusiveness and operational efficiency of the domestic bond market.
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